Wednesday, October 9, 2019



Fundamental Highlights

US indices ended sharply lower on Tuesday amid fading optimism over the scheduled US-China trade talks tomorrow. The US blacklisted additional Chinese tech companies from doing business with the US and restricted visas for Chinese officials. As a result of the hostile moves, market participants fear that the trade negotiations they’ve been looking forward may prove to be futile and that China may retaliate. While negative sentiment towards US-China trade situation will keep risk appetite subdued, there is potential for upside support should Fed Powell’s scheduled speech today raise expectations for a rate cut. Apart from monetary policy and trade headlines, the US releases job openings data for August which may impact direction should we see a sharply weaker than expected figure.

Technical Analysis

The Dow fell by 313 points to end at 26164 on Tuesday. The price once again failed to breach the 50-period MA and slid below the 26350 level to find support near the 26080 level before edging slightly higher. Today, look for a sustained move below 26080 to indicate selling pressure and test the 200-day MA at 25980 beneath which exists an ascending trend line from August’s low. However, should the support at 26080 hold, we would see the Dow range with a sustained move above 26215 required to indicate buying pressure and target the 26350 level near the 20-period MA.

Support: 26080/ 25980
Resistance: 26215/ 26350

Chart (H4)