Wednesday, September 25, 2019



Fundamental Highlights

US indices traded higher initially at the back of trade optimism before the announcement of an impeachment inquiry against Donald Trump weighed on sentiment and led the indices to end in negative territory. On trade news, reports confirmed that US-China trade talks would resume in two weeks which was followed by President Trump’s declaration on not settling for a bad deal with China. The volatility over the trade situation persists and a lack of progress is another reason to keep risk appetite subdued. Meanwhile, economic data failed to provide any support as the US consumer confidence came at 125.1 versus an estimate of 134.1. Today the US publishes New Home Sales data while two Fed members are scheduled to speak. Weak economic data would support the case for looser monetary policy in the future which markets are seeking in order to support US equities. Apart from the data, market participants should monitor trade headlines and political developments in the US to determine market sentiment.

Technical Analysis

The Dow started the week off by snapping its streak of 8 consecutive gains as it lost 142 points to end at 27076. The price fell and traded below the 20-period MA during the session yet the Dow remains resilient as it held above the psychological support at 27000. While the bullish trend remains intact, a trade below 27000 would indicate selling pressure and lead price to the lower support levels at 26900 and 26800. The latter level is what stands between the Dow and a more bearish phase. On the other hand, holding above 27000 would see the Dow maintain range-bound price action with a sustained move above the 20-period MA required to indicate buying pressure while a break above 27320 would be needed to suggest a bullish attempt to test the record high near 27390.

Support: 26800/ 26700
Resistance: 27000/ 27100

Chart (H4)