In that initial surge higher, it also pushed strongly through 27000 and 28000 which have played a significant role in the price action of the US30 in the last few months. Prior to the surge, it had enjoyed strong support from 26000 which its most recent fall from the resistance at 29000, which allowed the index some support to rally back higher again. The fall has followed a strong period which saw the US30 index rally very well moving from a six week low to back above the key 28000 level and towards 29000, which offered stiff resistance again. The 29000 level also provided resistance to the US30 index in early September, when it was approaching its all time high set earlier in the year, and now it has finally broken through with an increase in volatility.
For the last three months, the US index has moved mainly between support at 27000 and resistance at 29000 and with the repeated attempts to break through 29000 being thwarted, it demonstrated how significant the most recent break through is. For a few weeks in July the US30 index met 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.
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.
The Federal Open Market Committee of the U.S. Federal Reserve is currently holding its final meeting for the year this week and the markets will be closely watching the post meeting comments. It will be an interesting conclusion to 2020, in a year which saw the world’s largest economy suffered significantly due to the coronavirus pandemic and saw a new president set for office. In the post meeting media conference, the Fed Chairman Jerome Powell is widely expected to provide an outlook on the U.S. economy for 2021 with the COVID-19 vaccine rollout in the picture. In the background is the political issue of the ongoing failure of the U.S. Congress to pass a further spending package to help the economic recovery, which has been a hot topic and one that the Fed Chair have repeatedly suggested that needs to be addressed. Many analysts are expecting a cautious and concerned tone from Chairman Powell in his end of year comments.
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