Dow Jones futures are down modestly in Thursday trading, along with the other US market futures. The drop followed a pullback in stocks such as Tesla, which posted significant gains in Wednesday trading. Shares of chipmaker American Micro Devices is also trading lower.
The US markets are also taking in the new coronavirus data from China. Despite the drop in new infections and deaths in the Hubei province, the epicentre of the epidemic, China once more changed the diagnostic parameters for coronavirus infections. This new change is starting to attract questions as to how reliable the data being released on the situation is. Peter Oppenheimer, Chief Global Equity Strategist at Goldman Sachs, is also warning of the possibility of a near-term correction, even as the Dow Futures trade 110 points lower on the day.
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Recent price action on the Dow Jones daily chart indicates that a triangle pattern is starting to emerge. This symmetrical triangle is a short one and price is already 60% of the distance from the base to the point of convergence of the boundary lines.
Moreover, the price descent at the base of the triangle coincides with the descent from point D in the XABCD pattern. The line from X to D indicates higher highs, at the same time that the RSI is showing lower highs; a divergence signal.
The technical pointers indicate a price correction that is underway. However, a break of the triangle to the downside is required to confirm this view. If this downside break occurs, the door will be opened towards the immediate support at 28979. Further support also lies at 28195, where lows of 19/29 Nov 2019 as well as the trough that marks point C, are located.
On the flip side, an upside break of the triangle negates the price move to the south and opens the pathway for the Dow to target the all-time highs attained earlier this month.