June 12, 2019, | SQUARED DIRECT – The return of Sino-US trade concerns caused Wall Street’s rally to lose steam as US indices traded marginally lower on Tuesday. The Dow Jones Index’s bullish streak, catalyzed by the prospect of a near-term Fed cut and a US-Mexico deal, looks to get capped by unresolved trade tensions as a Chinese official stated that the nation would respond firmly should President Trump persist with tariff threats.
Separately, on economic data, the PPI data rose 0.1% in May whilst on a yearly basis it edged down to 1.8%, reflecting soft inflation. Today, the US publishes CPI data, which is expected to impact price action during the day as it provides policy cues while investor sentiment will be tested should Sino-US tensions arise.
Dow Jones index technical analysis
The Dow Jones reached an intraday high of 26260 before giving up gains to end slightly lower at 26048. The price failed to edge above the resistance zone of 26240/26260 and ranged above the 20-period MA acting as dynamic support on the rally and keeping the Dow above the 26000 mark.
The RSI reading exited the overbought territory as the rally lost upside momentum however, the Dow should re-test the resistance at 26240 should price sustain above the 26180 level. Failure to edge above that level would leave the price ranging with a decline below the 20-period MA around 26050 required to drive the price lower towards the support at 25950 which could trigger further downside price action.
Support: 25940/ 25820
Resistance: 26180/ 26260
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