Wednesday, July 3, 2019

DOWJONES - 03 July 2019


Fundamental Highlights

US indices traded higher on Tuesday while global growth concerns dragged US treasury yields lower as investors turned to safer assets. Support stems from recent US-China trade optimism as trade negotiations are reportedly underway, while caution stems from the reemergence of US threats to impose tariffs on the EU. Given that both trade situations remain uncertain, the Dow’s gains should be limited unless we see positive trade developments. Separately on economic data, the US publishes ISM non-manufacturing PMI, factory orders and ADP non-farm employment data today which are likely to provide direction on the Dow Index.

Technical Analysis

The Dow gained 70 points to end at 26786 on Tuesday. Since breaking out of consolidation and reaching a high of 26885, the Dow has formed a lower high at 26800 whilst the 20-period MA acts as dynamic support, suggesting the index may trend lower. We will look for a sustained move below the 20-period MA around 26700 and a decline below 26660 to drive the Dow towards the lower support level at 26500, and confirm a bearish divergence on the daily RSI reading. Alternately, a sustained move above the 20-period MA would indicate buying pressure with a move above 26800 required to re-test the highs.

Support: 26660/ 26580
Resistance: 26850/26940

Chart (H4)