Thursday, June 6, 2019

DOWJONES - 06 June 2019


Fundamental Highlights

The Dow Jones posted its second day of gains since Fed Chairman Powell assured that the FED would be willing to ease monetary policy in the face of weak inflation and the negative impacts of the global trade war on the US’s economy. His comments were interpreted as a signal on a potential rate cut, a move that would support US equities amidst trade tensions and weakening economic data out of the US, evident in yesterday’s ADP employment change data which came at 27K vs an estimate of 180K. On trade news, China and Mexico expressed a willingness to negotiate with the US despite President Trump’s tariff hikes and tariff threats on the respective nations and provided hope for a resolution. Today, The US publishes trade balance data for April and weekly jobless claims report which may impact price action during the day, however trade news will hold the stronger influence while markets lean on the FED’s dovish rhetoric to take US indices higher.

Technical Analysis

The Dow Jones rose by 0.82% to end at 25539 on Wednesday. With momentum shifting to the upside this week with the support of easing trade concerns and the Fed’s dovish stance, The price managed to overcome the 200-day MA at 25400 and trade above that level. Should momentum sustain, look for price to trade above the 25650 resistance level to target 25760 after which comes the resistance at 25950 coinciding with the 20-day MA maintaining the downtrend on the DOW. The RSI reading has reached the overbought threshold making it likely that price would turn lower should it trade below support at 25400 to target the 20-period MA at 25200.

Support: 25400/ 25300
Resistance: 25650/ 25770

Chart (H4)