Tuesday, August 20, 2019



Fundamental Highlights

The Dow Jones traded 0.96% higher on Monday as it extended the rally that followed its worst drop of the year last week. The gains were fueled by a rebound in treasury yields that followed last week’s troubling yield curve inversion as well as the prospect of economic stimulus from Germany and China. Moreover, the US administration granted a delay on Huawei restrictions thereby providing relief to US tech businesses. The news comes after China had warned to take retaliatory measures against the US’s latest round of pending tariffs which maintains the unsettling outlook on US-China trade relations. Today there are no major economic releases out of the US and risk appetite should be buoyed by hopes of easier monetary policy from global central banks. Look to trade headlines to influence price action on the Dow and market sentiment to remain cautious under a pessimistic global growth outlook.

Technical Analysis

The Dow added 249 points to end at 26135 on Monday. The price managed to hold and trade above the resistance at 26080 to reach slightly above the higher resistance at 26215. We may see a bearish turn from here should price fail to trade above the 26215 level which would otherwise indicate buying pressure and lead towards the 26400 level separating the Dow from a bullish outlook. Look for a sustained move below 26080 to indicate selling pressure and lead price towards the support at 25850 near the 20-period MA.

Support: 26000/25850
Resistance: 26215/ 26350

Chart (H4)