The sudden spike in new cases of the coronavirus (COVID-19) across Western Europe and around the world have spooked investors, causing the Dow Jones futures to plunge for the third straight session. This renewed selloff on the Dow Jones is a result of markets now genuinely spooked that a global pandemic cannot be ruled out at this stage.
Reports have indicated a sudden increase in the number of new cases in South Korea, Italy and Iran, and the numbers in China do not appear to show that the coronavirus outbreak is being contained efficiently. Cases in the US are also on the rise.
The Dow is nearly 2.5% down prior to market open, and other US market indices are trading lower as well. The S&P 500 is down 2.3% as is the Nasdaq 100 futures asset, which is trading 2.8% lower on the back of the selloff in several tech stocks.
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Technical Outlook for Dow Jones
The plunge in the Dow Jones futures have sent the asset towards the 28195 price level, where previous highs were seen on 19 Nov and 28 Nov 2019. This price level was also the site of role reversed lows of 16 Dec, as well as the low of 31 January 2020 which marks point C in the “W” harmonic pattern which has marked the price tops of the uptrend on the weekly chart.
A break below the 28195 price level sets up the Dow to plunge even further, with possible support targets at 27731 and 27373. If the Dow is able to retain support at 28195, a bounce that could enable some level of recovery to 28746 is likely.
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