US indices posted strong gains on Tuesday as trade hopes were reignited after President Trump tweeted that he would meet with Chinese president at the G-20 Summit next week and that the two nations will resume trade talks. Trade headlines prompted yesterday’s bullish reaction and today’s key FOMC meeting determines whether US equities are poised for higher moves. While the Fed’s dovish stance has been well established, the pace at which the Fed would act in accordance to easier monetary policy will be of markets’ concerns. Given that expectations of a policy move are higher for July than today, the forward guidance will determine whether rate cut expectations will be met. Unless the Fed signals projected rate cuts this year, we may see a market sell off on Wall Street.
The Dow traded 1.35% higher to end at 26465 on Tuesday as positive trade headlines dominated price action and pushed the index out of its range-bound ahead of today’s FOMC meeting. The Dow managed to push above the 26260 level, now turned to newly found support, to reinforce the bullish outlook and reach an intraday high around 26550. While the RSI reading indicates price has entered the overbought territory, bullish momentum may drive the index to overcome the resistance at 26550 to target April’s high at 26670 should price hold above yesterday’s close. Failure to overcome resistance at 26550 may see price exhibit a short-term pullback with a sustained move below the 26460 level required to take the index lower towards support at 26380 followed be 26260.
Support: 26380/ 26260