Dow Jones
The Dow Jones futures surged today to all-time highs at 27,469 before retreating slightly, on the back of improved risk sentiment. The US-China Phase 1 deal looks set to be signed in the coming days, even as officials on both sides affirm that an agreement in principle has been reached.
Robert O’Brien, who is the United States (US) National Security Advisor was picked up by the newswires as saying that both countries were finalizing Phase 1 of the trade agreement. O’Brien made these comments at the ASEAN-US summit in Bangkok on Monday.
With this move, the Dow Jones futures is signaling a potential move for the Dow Jones Industrial Average to join the S&P500 and Nasdaq, which posted all time-highs last week. The Dow is also getting some positive impetus from the better-than-expected employment change component of the US Non-farm payrolls data.
As the Dow Jones average looks set for a higher open which could take it to all-time highs of its own, the big question is whether this will mark the start of another major bull run or not. The early technical returns indicate otherwise, as a major rising wedge which could have long-term downside implications continues to evolve. This would require price to form yet another high somewhere closer to 28,000 before the upper wedge border will resist further upside movement.
Near term, with no previous highs to work with, the pivot points will play an important role in determining intraday support and resistance areas. 27,438.50 and 27,547 are the R1 and R2 pivots respectively. Price is already testing R1 and a break of this area should open the door to 27,547.
To the downside, long-term support lies at 27,231, as well as at 27,122 and 26,915 (central pivot, S1 and S2 respectively). Correction to these areas will reflect the rejection of price at the upper wedge border. A break below 24,971 will confirm the downside break of the wedge and open the door to 22,661 in the long-term.