Wednesday, May 8, 2019

DOWJONES - 08 May 2019


Fundamental Highlights

US indices ended deep in the red as the plunge sparked by President Trump’s tariff threats on China was followed by another on Tuesday after US trade officials confirmed that tariffs would be imposed later this week. The news weighed on the long-anticipated prospect of a trade deal and selling pressure prevailed in the wake of fears over escalating trade tensions between the two economic powerhouses which would lead to uncertainty over the global economy. Economic data took a step back, despite JOLT job openings result pointing to a robust labor market, as US-China trade headlines act as a negative catalyst on US equities. With no major economic releases out of the US, Sino-US trade headlines will remain in focus and drive price action for the day.

Technical Analysis

The blue-chip index’s short lived ability to recover was followed by a sharp decline on Tuesday as the Dow fell 1.79% to end at 25965. Selling pressure accelerated the price’s decline towards the rising trend line from March’s low and bottomed at 25730 to form a reversal candlestick suggesting a potential shift to the upside. Moreover, the price has formed a new low while the RSI reading has formed a higher low thereby indicating a bullish divergence. To confirm that the bears are losing power while the bulls are gaining momentum, price would have to hold above 25880 and overcome the 20-period MA after which it faces the 50-period MA acting as dynamic resistance around 26330. Failure to sustain above 25880 would drive the Dow Index towards lower support levels.

Support: 25880/ 25790
Resistance: 26080/ 26160

Chart (H4)