The Dow Index managed to rise 0.15% higher to end at 26592 on Tuesday despite mixed earnings reports from its constituents. On the other hand, Economic data was in favor of bullish pressure as US Pending home sales rose 3.8% and consumer confidence came well above estimate. The real test of how much higher the Dow can go hangs on today’s closely watched FOMC meeting. While the interest rate is expected to see no change, the guidance on future monetary policy and whether the scenario of a rate cut holds is what markets’ are seeking to interpret amidst benign inflation and a strengthening economy as the recent data suggests. Wall Street may have overestimated a rate cut scenario this year, and a neutral stance from the Fed could leave little impact on the Dow Index. Moreover, ahead of the pivotal event, the US publishes ISM Manufacturing PMI and ADP employment report which may influence direction during the day.
The Dow Index dipped to find support on the lower trend line of the rising channel before edging higher to end above the 26590 mark. The price has managed to rise above the 20-period MA and a sustained move above 26590 raises the chances of overcoming the resistance at 26680 separating the Dow from further advances towards its record high at 26940. So long as price holds above 26500, buying pressure persists with a move below 7470 required to signal a lower move.
Support: 26520/ 26470
Resistance: 26680/ 26790