Wednesday, May 29, 2019

DOWJONES - 29 May 2019

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Fundamental Highlights

US Indices traded lower on Tuesday with the Dow posting the biggest loss as it declined by 0.93%. On trade news, President Trump stated on Monday that the US is not ready to make a deal whilst reminding China that it could further raise tariffs, to which the market had a delayed bearish reaction. The US consumer confidence index showed a strong reading of 134.1 vs an estimate of 130, however the data was overshadowed by trade tensions. There is fresh speculation that China would retaliate against the latest ban on telecom Huawei by restricting earth exports to the US. Fears over escalating tensions and a protracted trade dispute burdening global growth sent US treasury yields lower, further reflecting markets’ risk averse state. Traders should continue monitoring US-China trade developments as it determines market sentiment and impact price action.

Technical Analysis

The Dow Index clawed back earlier gains on Tuesday as it failed to overcome the resistance at 25680 and drifted lower to end at 25347. The Index dipped below the support provided by the 200-day MA at 25430 and a sustained move below this level should drive the index towards the support at 25215. However, holding above the 200-MA could turn the index higher as it may confirm a bullish divergence given that price is forming a new low while the RSI reading has so far failed to correspond and formed a higher low. Look to the 20-period MA around 25540 to determine near-term direction as a move above this level would signal the presence of buying pressure and potentially re-test the 25690 level which would negate bearish momentum. Alternately, breaking below the support at 25215 would see losses extend to the 25000 level.

Support: 25215/ 25080
Resistance: 25430/ 25540

Chart (H4)
DOWJONES