In contrast to last week’s losses, US indices started this week on a positive note with the Dow Index paring losses as it rose 0.79% on Monday to close at 25650. US retail sales data came in better than expected and provided reassurance on decent consumer spending in the US, while today’s CPI data will be translated into the FED’s outlook on subdued inflation which had recently supported the bank’s dovish stance. While markets are accounting for concerns over slowing global growth and world trade developments, the Brexit headwind has yet to be settled this week as the outcome on today’s Brexit vote may lead to ruling out a no-deal Brexit and in turn clear the air for the return of a bullish tone to global equities.
Last week’s pull back on the Dow was reversed as the price rebounded off the support at 25220 and surpassed resistance levels to end at 25650. If Monday’s rebound is to progress, price has yet to trade through the 25760 level to target resistance at 25880 which will bring back into play the psychological resistance at 26000. Failure to surpass the 25760 level will result in the formation of a lower high on the index’s recent downtrend and suggest a move back towards the 25550 level, which will dictate further direction.
Support: 25550 / 25380
Resistance: 25880 / 26080