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US30 - Trades Around Key 30000 Level as all Eyes on Fed



US30 - Trades Around Key 30000 Level as all Eyes on Fed
In the last two weeks the US30 index has traded on top of the key 30000 level after spending several weeks applying buying pressure, in which the level stood up and resisted prices firmly keeping the index below this level for the most part. In the last week or so, the US30 index has been resting on top and receiving solid support from this key level so it will be interesting to see if the index continues to push higher to new highs off this support. During the last month or so, it has also been well supported by the 29000 level, which may be called upon should the support at 30000 fail. During the first half of November, the index made its first run towards 30000 and in doing so, smashed through resistance at 29000, which has applied downward pressure on the index for some time.

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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The information provided herein is for general informational and educational purposes only. It is not intended and should not be construed to constitute advice. If such information is acted upon by you then this should be solely at your discretion and Valutrades will not be held accountable in any way.

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.