The Dow Jones Industrial Average has had an underwhelming performance this Wednesday, as markets await further clarification on Congress’s latest moves to pass a new coronavirus stimulus bill.
A group of US senators are proposing a bipartisan bill that calls for an additional $908 billion in coronavirus relief payments, some of which would go to state and municipal governments. Additionally, $228 billion is being sought under the Paycheck Protection Program (PPP) for hotels, restaurants, and retail businesses.
This was not enough to overcome the negative market sentiment, which resulted from downbeat private-sector hiring data. The ADP Employment Change was lower than expected, coming in at 307K (versus 420K consensus). It was also lower than October’s upward revision of 404K. Markets will now be looking towards Friday’s payroll numbers for further direction.
The Dow Jones daily chart shows how price action for Tuesday retraced to the triangle’s lower boundary, forming a pinbar (shooting star). This has been followed by a hanging man pinbar, resting on the triangle’s lower border. These candles suggest that the market is awaiting bullish momentum to push the price beyond the triangle in the expected breakout pattern. If this occurs, we would see new record highs on the Dow, targeting key Fibonacci extension areas at 31079 or 32376.
On the other hand, a breakdown of the triangle invalidates the bullish breakout expectation and opens the door to downside targets at 29255 and 28979, in the first instance.
