Monday, June 3, 2019

DOWJONES - 03 June 2019


Fundamental Highlights

US indices suffered sharp losses on Friday to end a bearish month as global growth fears heighten reflected in sliding US treasury yields. Selling pressure was prompted by President Trump’s tariff threat on Mexico amidst an escalating US-China trade war proven to deteriorate market sentiment as well as the global economy. On economic news, US PCE data showed US inflation picked up in April however remains below the FED’s target of 2%. The figure highlights Powell’s remark that low inflation may have been transitory and may shift market’s focus to the geopolitical risks posed by escalating trade tensions. Today, the release of the US ISM Manufacturing PMI figure is expected to improve and should provide direction during the day while trade headlines will continue to dominate market sentiment as investors cautiously await to see how trade conflicts on various fronts unfold.

Technical Analysis

The Dow Jones declined by 1.41% to end below the 25,000 level at 24815. The daily RSI reading shows the index has entered the oversold territory, while the 4H RSI reading exhibits a trend line resistance that may very well keep the Dow in the oversold territory should it fail to break above that line and out of the oversold area. Bearish momentum has kept price trading below the 20-period MA currently at 25,000 as it slides down the lower Bollinger band. Traders should look for a trade above the 25,000 mark alongside an exit of the oversold region on the RSI to point to a slight recovery towards the resistance at 25080 and 25220. Failure to do so should leave the price ranging below 25,000 with a break below 25650 required to drive the index towards the lower support at 24530.

Support: 24650/ 24550
Resistance: 24860/ 25000

Chart (H4)