US indices traded sharply higher on Thursday fueled by news that the US and China would resume trade negotiations in October. Meanwhile, US economic data provided support during the day with improved ADP employment data, factory orders and non manufacturing ISM. Today the US releases its monthly jobs report which includes the non-farm payroll report, unemployment rate and wages growth while Fed Chairman Powell is scheduled to speak. The data is likely to have a strong influence on the day as it would provide further insight on future monetary policy. Apart from the data, traders should continue monitoring US-China trade headlines as there is a chance we may see this renewed trade optimism fade in the absence of fundamental changes.
The Dow extended gains on Thursday as it rallied by 372 points to end at 26728. The price reached an intraday high of 26840 before settling slightly lower. It is worthy to note that the Index is exhibiting a strong bullish momentum as price hugs the upper Bollinger band while the daily RSI reading is trending higher suggesting there is further upside to come. Look for a break above yesterday’s high to signal a bullish continuation towards the higher resistance at 26920 followed by the 27000 level. On the other hand, look for a trade below 26685 to indicate selling pressure with immediate support found at 26550.
Support: 26685/ 26550
Resistance: 26840/ 26920