The Industrial index performed well on the back of Nonfarm payrolls on Friday but was hard hit by US President Trump’s announcement of an additional $200B in tariffs on China last night. This has ended the leg higher that was built from 24000.00 with price now testing down to the 200DMA at 24600.00. The 100 DMA comes in at 24540.00 with the 50 DMA at 24525.00 and a loss of this area could see a dip through 24500.00 to 24360.00. Further bearish price action can result in a fall to 24200.00 and the low at 24000.00. A break of the long term trend line support at 23770.00 can open the way for a deeper correction.
Earnings are kicking off at the moment with Friday an important day for financials. It is possible that good earnings can allay trade war fears and push price higher with yesterday’s high a key area to keep in mind at 24945.00. A break higher would see a test of 25000.00. This is a crucial level for traders which would confirm the base is intact providing a steady advance is maintained. The 25150.00 area is important in this regard with a move to the rising trend line resistance at 25300.00 and the recent highs at 25400.00 supported from this level.
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