Dow Jones analysis – Index exhibits strong bearish momentum

Dow Jones Index is exhibiting a strong bearish momentum as price hugs the lower Bollinger band MA to reach new lows.

5 August 2019 | SQUARED DIRECT – US Indices traded lower on Friday as trade pessimism continues to weigh on global market sentiment following President Trump’s threat to impose new tariffs on China. Reflecting markets’ risk-off mood, US treasury yields slid as demand for safer assets increases amidst escalating trade tensions and fear of retaliation from China in case the US delivers the tariff threat.

Separately on economic data, the US jobs report came in line with expectation however failed to provide upside support given the conditions of uncertainty over the US-China trade war which increased the likelihood of further monetary policy easing from the FED. Today, the US publishes ISM non-manufacturing PMI figure should impact price action during the day while a bleak global economic outlook should keep sentiment weak.

Dow Jones technical analysis

The Dow declined by 0.37% to end at 26485 on Friday. The Index is exhibiting a strong bearish momentum as price hugs the lower Bollinger band MA to reach new lows. The Dow recorded an intra-day low at 26205 on Friday, and futures are pointing below this level today indicating further weakness is in store.

The daily RSI reading has neared the oversold territory suggesting that price should consolidate if not reverse once bearish momentum weakens. We may see that occur around the crucial trend line support from the December low.

For today, Look for a move above 26500 to indicate buying pressure and target the 20-period MA. On the other hand, a sustained move below 26370 would indicate selling pressure with a break below 26130 required to target the support at 26080.

Support: 26130/26080
Resistance: 26370/ 26500

Chart (1D)


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