Wednesday, November 6, 2019



Fundamental Highlights

US indices ended mixed on Tuesday with the Dow rising by 0.11% to print new highs. Bullish sentiment remains upheld by hopes of the so-called phase one US-China trade deal which would be secured under the condition that the US lifts tariffs off China. However, trade optimism may have reached its peak as a lack of fresh headlines will allow markets’ attention to wander on concerns regarding the global economy that has already been negatively impacted by the US-China tariff war. In terms of data, the US trade deficit for September contracted to 52.5billion, the ISM non-manufacturing PMI figure came at 54.7 versus an estimate of 53.5, while Jolt Job openings for September came slightly lower than expected. Today, the US publishes 3rd quarter non-farm productivity and labor costs data. Much like yesterday, the data may have a muted impact on price action as markets remain focused on the trade situation.

Technical Analysis

The Dow posted a modest gain of 30 points to close at 27492. The index took out the high at 27472 from the previous session and reached an intraday high of 27498 on Tuesday. The bulls are struggling to press any higher however remain in control as price has held above the 27370 support level. The Dow is recording all-time highs, however the daily RSI reading has yet to top its previous peak that corresponds with September’s high in order to sustain buying pressure. Failure to do so would indicate a bearish divergence and trigger the start of a retracement. Overcoming the intraday high at 27498 is required to signal buying pressure and drive the index higher. On the other hand, a decline and sustained move below 27370 would indicate selling pressure and target the lower support at 27265.

Support: 27370/ 27260
Resistance: 27498/

Chart (H4)