The Dow Jones is having a good week and is so far up by 1.45% since Monday. The determination of both the US and China to figure out their trade differences boosted stock markets as a Chinese commerce ministry spokesman on Thursday said both sides had decided to remove some tariffs “in phases.”
The move higher in stock markets has also been inspired by the Federal Reserve and ECB supporting the world economy by cutting interest rates, and the latter has also introduced QE.
In the short-term the Dow Jones retraced from a trendline that also capped gains in the index in September, and supported the index in July. Today, it looks like the bullish traders would like to revisit that trendline and likewise weekly high at 27777. However, the Dow Jones is overbought per the RSI-14 indicator as seen in the panel below, and a failure to take out the trendline might trigger profit-taking and cause a slide to the median line currently around the 27150 levels.