Monday, October 28, 2019



Fundamental Highlights

US indices traded higher on Friday as news suggest that the US and China were making trade-related progress while better than expected US earnings reports provide support. A semblance of improvement in the trade dispute proves to be enough for the bulls to drive prices higher however the Dow Index still faces the risk of a protracted US-China trade war which would continue to burden the global and domestic economy. Whether the Dow can muster enough momentum to reach all-time highs in the near term will depend on a busy week ahead. The Fed’s monetary policy meeting awaits on Wednesday which would happen ahead of the release of the US 3rd quarter GDP. Market participants are expecting a rate cut and signs of looser monetary policy in the future. Today the US publishes good trade data which is unlikely to have an impact as sentiment towards the trade war as well as the monetary policy meeting dominates market participants.

Technical Analysis

The Dow gained 152 points to end at 26958 on Monday. The price managed to breach the 50-period MA and 26885 resistance level to break its sequence of lower highs since mid-October. Dow futures are pointing higher today as price struggles to reach and press above the resistance at 27000 to make way towards the higher level at 27110. Look for a trade below the support provided by the 50-period MA around 26860 to indicate selling pressure and lead the Dow towards the support level at 26800 near the ascending trend line. A break below this line would impair the bullish view and target the lower levels at 26700 and 26660.

Support: 26860/ 26800
Resistance: 27000/ 27110

Chart (H4)