Friday, June 21, 2019

DOWJONES - 21 June 2019


Fundamental Highlights

US indices traded sharply higher on Thursday following the FED’s policy meeting on Wednesday as markets price in a rate cut in July with renewed conviction. The global shift towards easier monetary policy is not the only fundamental factor providing support as US-China trade concerns ease after reports that the two nations would resume negotiations ahead of their G-20 summit meeting. Markets are embracing possibilities on trade relations and a monetary policy shift that have yet to materialize to sustain the rally in US equities. Meanwhile the US’s economic outlook is growing dimmer and ramping up demand for safer assets reflected in declining treasury yields. Today, the US publishes Manufacturing PMI figure which may follow the trend of weakness revealed in the manufacturing sector after Philadelphia and New York reported dismal manufacturing index numbers. Moreover, the US will publishes existing home sales for May and economic data may have an impact on price action during the day while sentiment should remain buoyed by rate cut hopes and trade optimism.

Technical Analysis

The Dow index soared 0.94% and extended gains towards the resistance of 26800 before ending off the session’s high at 26753. The daily RSI reading is showing that price is approaching the overbought territory which calls for caution as the Dow may exhibit a pullback should price fail to overcome the resistance at 26800, acting as a barrier for further advances towards the record high at 26940. Should price hold above the 26710 level, look for a breakout above 26800 to bring into view the 26940 level and a decline below the 26630 to signal a lower move towards the support provided by the 20-period MA around 26530.

Support: 26630/ 26530
Resistance: 26800/26940

Chart (H4)