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US30 - Drops Back Through Key 28000 Level as Trump Ends Stimulus Talks



US30 - Drops Back Through Key 28000 Level as Trump Ends Stimulus Talks
After rallying well for the last two weeks, which saw the US30 index moving from a six week low to back above the key 28000 level, it has reversed in the last 24 hours moving it strongly back below 28000. It has spent the best part of the last month trading between support at 27000 and resistance at 28000, with the latter playing a role and pushing the index back below into the range. Generally since the beginning of September, the US30 index has declined sharply from its six month high above 29000 back to lows below 27000, before settling a little in the last few weeks. Any support received at 28000 was convincingly broken after having provided some support for a few days and it is currently offering some resistance.

In the two weeks leading up to the resistance at 28000 around mid-August, the US30 index moved steadily higher reaching a then six month high just above 28000. For a few weeks in July the US30 index meet resistance at another key level of 27000 whilst bouncing off support at 26000, which is why the 27000 level is now offering some support to the index. For the most part of the last two months, the US30 index has traded in a range between support at 25000 and resistance at 28000, with the 27000 level also playing a key role in the last few weeks.

Throughout June, the index enjoyed solid support from another key level at 25000, while receiving some resistance from 26000 remaining in a range between these levels, up until the break a few weeks ago. Throughout April and May 25000 level had turned away the index on several occasions, reinforcing how significant the 25000 level had become in this period, and it has been able to provide some strong support to the index in the last month or so. Should the index decline further, the 25000 level will be expected to continue to offer support.

Throughout April, the US30 index rallied higher to a one month high near 25000, while the key level of 22500 supported the index. During this period, the US30 index settled right down content to trade right around the 24000 level, with the 25000 level looming above and continuing to offer resistance whenever the index rallied. The US30 index is also likely to receive some support from 22500 should it break back lower through 25000. Since mid-March the US30 index has done very well to regain most of the lost ground, after the significant drop where it moved from all time highs above 29000 down to a three year low near 18000.

The United States President Donald Trump has declared he is calling off stimulus negotiations with the Democrats "until after the election".  This announcement sent stocks lower.  At 2:48 p.m. New York time on Tuesday, President Trump tweeted: “I have instructed my representatives to stop negotiating until after the election when, immediately after I win, we will pass a major Stimulus Bill that focuses on hardworking Americans and Small Business.”  Cleveland Federal Reserve President Loretta Mester said that this will adversely impact the economic recovery from the coronavirus pandemic.  “Certainly, you know, the recovery will continue without it, I think, but it’s going to be a much slower recovery and it’s disappointing that we didn’t get a package done,” Mester said on CNBC.  “There’s still a lot of households and a lot of small businesses that really need that kind of help, and even though the recovery has come in somewhat stronger than many of us thought, it would, we’re still in a pretty big hole,” she added.  Earlier in the day Fed Chairman Mr. Jerome Powell called for more fiscal support to workers and businesses still in need.

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This post was written by Graeme Watkins

CEO Valutrades Limited, Graeme Watkins is an FX and CFD market veteran with more than 10 years experience. Key roles include management, senior systems and controls, sales, project management and operations. Graeme has help significant roles for both brokerages and technology platforms.