Monday, May 20, 2019

DOWJONES - 20 May 2019


Fundamental Highlights

US indices traded lower on Friday as US-China headlines dominate market sentiment. Earlier in the day, indices recovered from losses as University of Michigan’s survey results showed that consumer confidence in the US notably improved in May. In addition, the US administration decided to lift steel and aluminum tariffs on NAFTA countries and delay auto tariffs on the EU for 6 months, thereby limiting the scope of trade wars and providing some relief. Nonetheless, what remains is the trade conflict with China, a critical market driver which erased earlier gains as China would reportedly stall trade negotiations in the wake of President Trump’s ban on Chinese telecom Huawei. Trade tensions will remain a central theme as concerns over global economic growth persist and induces news-driven market moves.

Technical Analysis

The Dow Jones pared an early 200 point drop on Friday to end 0.38% lower at 25764. The price managed to hold above the 20-period MA as it consolidated gains while respecting resistance at 25950. Overcoming 25950 would clear the path towards the resistance zone of 26080/26100 around the 20-day MA. Failure to edge above the resistance at 25950 should leave the 20-period MA currently at 25720 indicative of near-term direction. Moreover, the RSI reading continues to correspond with price action and a break through the RSI trend line support alongside a decline below 25720 would drive the Dow to the lower support level at 25620 separating the index from further declines.

Support: 25720/ 25620
Resistance: 25950/ 26080

Chart (H4)