The US30 index is also likely to receive some support from 22500 which previously provided resistance to the index several weeks ago. It now seems content to remain within this range until it can clearly break through one side.
In the second half of March, the US30 index surged higher from down near 18000 back up above 20000 which only added to its surge in volatility. Since mid-March the US30 index has done well to regain some 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. During its rapid fall, the US30 index completely ignored any possible levels of support on the way lower indicating how strong the move was. Fortunately the index has been able to rally higher in the last month or so, consolidate around 22000 before its recent move higher up towards resistance at 25000.
For the two weeks prior to the sharp fall, it had been trading in a narrow range between the key 29000 level and 29500, enjoying support from the former and trading near all time highs, however this has now given way and would be expected to offer some resistance whenever the index is able to rally and return to this level.
As the world is rocked by the ongoing coronavirus pandemic, central banks around the world are taking drastic steps to curb the economic fallout from the virus. As many countries have instituted lockdowns and implemented travel bans to stem the spread of the virus, the U.S. economy has been devasted by these measures. Federal Reserve Chairman Jerome Powell believes the U.S. economy will recover from the current downturn but may need a vaccine for the coronavirus before that is possible. “In the long run and even in the medium run, you wouldn’t want to bet against the American economy. The American economy will recover,” Mr Powell said in an interview on CBS’ ‘60 Minutes’. Mr Powell did concede that any economic recovery will hinge to an extent on how Americans feel about their safety. “Assuming there’s not a second wave of the coronavirus, I think you’ll see the economy recover steadily through the second half of the year,” he said. However, he added that “for the economy to fully recover ... that may have to await the arrival of a vaccine. ”This is a time of great suffering and difficulty and it’s come on so quickly and with such force that you really can’t put into words the pain people are feeling and the uncertainty they are realizing,” Powell added.
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