Asian markets struggled to keep up with the U.S session on Wednesday as recurring worries about the global economy creep back in. "I think that reflects a lingering caution. The pandemic is still a concern...non-tech stocks are still weighed down by COVID-19," - Moh Siong Sim (Bank of Singapore analyst.)
New life returned to the U.S Dollar this week after the central bank decided, as expected to keep interest rates at bay. The dollar rose to a new high last seen in July against a basket of currencies, but some say it looks like a squeeze on the Dollar shorts.
The Wall Street 30 Technical Analysis
U.S Markets might be at a tipping point this week if we don’t see renewed buying come into the major Indices which have turned lower since the Fed decision.
The Wall Street 30 has moved lower from the 28123 resistance level and penetrated the 27155 support level as discussed in our last Technical insights. The support level penetration has completed a Head & Shoulders pattern with price currently retesting the neckline.
Technical key areas to keep an eye on - WS30 Daily Chart Timeframe
- Price action needs to close above the 28123-resistance level to negate the Head & Shoulders reversal pattern playing out and targeting lower levels as previously discussed.
- The 50-day SMA (blue line) is above the price action supporting a new downward trend.
- The Relative Strength Index (RSI) is also below the neutral level at 50 and needs to move higher to negate a downturn.
Chart Source: Wall Street 30 Daily Timeframe - GT247 MT5 Trading Platform
Technical insights – what the Beef is looking at now
We did not see any buy confirmation after the FOMC statement as the price action did not close above my 28123-resistance level supported by volume.
The formation of the Head & Shoulders technical pattern will be watched closely, especially if the price action breaks the 27155-support level and form lower lows and lower highs.
The price action must close above the 28123-resistance level to negate the H&S reversal pattern supported by the 50-day SMA (blue line).
The price action is still within my target levels so not much has changed over the weeks despite the fundamental changes, so it's just a matter of sitting on one’s hands until the parameters are met.
Take note: The outlook and levels might change as this outlook is released prior to the current day (Wednesday the 23th of September 2020) U.S Market open.
Sources – MetaTrader5, Reuters
Barry Dumas | Market Analyst at GT247.com
Barry has 12 years experience in the financial markets. He enjoys educating clients on trading / investing and providing punchy technical analysis on securities. He currently holds a Wealth Management qualification and is studying towards becoming a Chartered Market Technician® (CMT) designation holder.
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