Monday, October 21, 2019



Fundamental Highlights

US indices traded lower on Friday with the Dow declining by 0.95% as the global economic outlook was dented by a drop in China’s GDP figure which reminds markets of the negative impacts of the US-China trade war and justifies the IMF’s lowered global growth forecast for the year. The week ahead bears the influence of major corporate earnings releases which factors as a significant driving force for price action. Moreover, it would clarify the US’s macroeconomic picture which has recently demonstrated a slowdown in manufacturing activity. Today there are no major economic releases to impact price action on the Dow and influence will be left to earnings report and geopolitical headlines. Considering that the Dow is within reach of all-time highs, traders should be cautious of buying into its strength whilst accounting for positive catalysts such as trade news and upbeat corporate reports.

Technical Analysis

The Dow suffered a loss of 255 points to end at 26770 on Friday. The index found support at the 50-period MA currently near the 26770 level which will determine whether there is further weakness in store. Today look for a break below the 26770 level near the 50-period MA to target the lower support levels at 26660 26620 and 2550 near the 50-day MA. However, should the 50-period MA hold as support then we may see price turn higher to meet resistance at 26880 followed by the 27000 horizontal level.

Support: 26770/ 26620
Resistance: 26880/ 27000