Friday, September 13, 2019



Fundamental Highlights

US indices traded higher yesterday as positive trade developments and a dovish ECB provide markets with bullish support. The Dow traded 0.17% higher and is within spitting distance from its all-time high at 27390 as US-China news acts as the positive catalyst. However, given that there has been no fundamental changes on the trade war, the Index is vulnerable to downside pressure and is at risk of reversing gains with a slight change of sentiment. On monetary policy, the ECB’s decision to cut its key interest rate and relaunch its bond buying program maintains market expectations that the FED would follow suit. In terms of economic data, core CPI figures impressed and showed inflation increased by 2.4% on an annual rate and 0.3% on the month. Today, the US publishes retail sales data and anything below expectations could drive US equities lower in a cautiously positive environment. Traders should continue monitoring trade headlines as the US-china trade war continues to influence market sentiment and price action.

Technical Analysis

The Dow extended gains by 45 points to end at 27182 on Thursday. The price reached a high of 27319 before trading below this level whilst holding above the 27100 level. The RSI reading eased off the overbought territory and found support on the ascending trend line, indicating there is potential for further upside on the Dow. Given that the Dow is near its record high at 27390, there is a good chance we see a retracement take place on the uptrend. A break below the RSI trend line would signal a pullback with a decline below 27100 required to drive price to the support at 27000 followed by 26930. On the other hand, a sustained move above 27145 would maintain buying pressure while taking out yesterday’s high would be required to target the resistance at 27390.

Support: 27110/ 27000
Resistance: 27319/ 27390

Chart (H4)