Monday, July 8, 2019

DOWJONES - 08 July 2019


Fundamental Highlights

US indices opened sharply lower on Friday as a strong NFP report undermined the case for Fed rate cut this month. The data showed the economy added 224k jobs vs an estimate of 160k while the unemployment rate went up from 3.6% to 3.7%. Given that the prospect of easier monetary policy from the FED is what strengthened US equities to record highs lately, Fed Chairman Powell’s testimony this week will reveal whether his position remains as dovish as it last was, and in turn will determine whether the bulls can go any higher. Today there are no major economic releases and traders can look to trade developments to guide monetary policy expectations and market sentiment.

Technical Analysis

The Dow Jones dropped as much as 245 points to reach a low of 26720 before recovering some of the losses to end 0.16% lower at 26922. The Index retreated from its newly found territory of record highs and traded below the 20-period MA to suggest a potential reversal. Look for a sustained move below the ascending trend line from mid-June and a move below the support at 26720 to indicate selling pressure and drive price to lower levels. Alternately, holding above the 26720 level as well as the ascending trend line would enable price to recover from a short term pullback with a trade above the 20-period MA around 26890 required to bring about a re-test of the resistance at 26945.

Support: 26720/ 26670
Resistance: 26890/26945

Chart (H4)