US indices posted sharp declines on Tuesday as weak US economic data prompted declines in US treasury yields and supports the case for looser monetary policy. The US ISM manufacturing PMI fell to contraction territory as it came in at 49.1 in August. On global trade news, After US tariffs have been implemented, the prospect of progressive trade negotiations seem questionable and maintains a cautious market sentiment towards the trade situation. Today, the US releases trade balance data for July, however the stronger influence on price action will remain to US-china trade developments.
The Dow lost 285 points to end at 26118 on Tuesday. The price failed to break above the 26280 level and recorded an intra-day low of 25976 before edging back above the support provided by the 100-period MA near 26020. Today, dow futures are pointing higher and looking to break above the 26280 level near the 20-period MA. A sustained move above this level would indicate buying pressure while a trade above the 26420 level is required to drive the Dow towards 26550 near the 50-day MA. Failure to trade above the 26280 level would maintain selling pressure and target the 26130 level coinciding with the rising trend line support from August 26th low. A break below the support provided by the 100-period MA would be required to signal further weakness in the Dow.
Support: 26130/ 26020
Resistance: 26300/ 26420