Thursday, June 20, 2019

DOWJONES - 20 June 2019


Fundamental Highlights

US Indices ended higher on Wednesday with the Dow gaining 38 points after the Fed concluded its two-day policy meeting and kept rates unchanged. Chairman Powell gave Wall Street hope by stating that the case for a rate cut has strengthened against a backdrop of a weakening domestic economy, slower inflation, and global trade tensions. Moreover, the recurrent word “patient” was dropped from the policy statement thereby signaling a possible rate cut this year while reinforcing the Fed’s readiness to act as appropriate to sustain the economy. Following the policy statement, US Treasury yields declined sharply as the increased prospects of a rate cut point to a concerning economic outlook. This leaves US economic data under scrutiny as the next policy move will be data dependent. Today the US publishes Philly Fed Manufacturing Index figure and weekly jobless claims which may provide direction while markets will continue monitoring US-China trade headlines to impact the improved sentiment over confirmations that the two nations would meet next week.

Technical Analysis

The Dow traded 0.15% higher to end at 26504 as the FOMC meeting provided support by increasing prospects of a rate cut. The Dow managed to hold above the 26460 level and reach the resistance at 26550 despite an RSI reading within the overbought territory. Futures are pointing to a positive opening as bullish momentum enables price to overcome the 26550 level and target the higher resistance at 26670. Overcoming April’s high at 26670 would clear the path for further gains and signal bullish continuation towards the resistance at 26800. Look for the RSI reading to exit the overbought territory to signal a lower move with immediate support found at 26460 followed by the 26380 level coinciding with the 20-period MA.

Support: 26460/ 26380
Resistance: 26670/26800

Chart (H4)