US Indices extended gains for a third day on Thursday as positive earnings reports out of Walmart and Cisco alongside better than expected economic data was enough reason to overlook US-China trade tensions for the day. Support stemmed from US data that showed initial jobless claims declined, housing starts rose 5.7% in April and the Phil Fed manufacturing index reached a 4-month high at 16.6. Outside the numbers, President Trump’s recent ban on Chinese telecom Huawei highlights escalating tensions between the US and China. Traders should pay attention to how the trade dispute unfolds as recent developments have potentially hindered progress in reaching a trade deal, upon which US equities rely on for bullish support. In terms of data, The US publishes consumer sentiment figures which could provide support depending on the results.
The Dow Jones rose 0.84% to end at 25862 on Thursday. The price managed to surpass the 50-period MA at 25750 before it approached resistance at 25950 and held below it. The RSI reading Shows price action corresponding with a rising support trend line on the RSI reading which suggests there is room for the price to extend gains past the resistance at 25950 after which it faces the resistance zone bounded by the 20 and 50 day MA at 26080/26140 . Breaking through the RSI trend line combined with a decline below the 25630 would suggest a turn lower and target support at 25400. Meanwhile, holding above the 25630 level would be required to indicate the presence of buying pressure while a move above 26,000 is required to break the sequence of lower highs on the Dow’s downtrend.
Support: 25750/ 25630
Resistance: 25950/ 26080