The Dow Jones futures are up sharply today, helping the index asset to claw back on some of the losses it sustained yesterday. Yesterday was the worst trading day on the Dow since the crash of 1987, suffering a 38.98% drop. However, stocks of Apple, Boeing, Tesla and Amazon as well as chipmakers Nvidia and American Micro Devices all rebounded today as the US Congress neared a deal with the presidency to implement a rescue package to mitigate against the economic impact of the coronavirus.
The S&P500 and Nasdaq are also up today, complementing the 5.2% gain for the Dow on the day. American Airlines and United Airline Holdings are also posting gains of 8.5% and 6.8% on the day, leading a mini-revival on travel stocks.
The price activity on the Dow continues to remain dynamic in response to the coronavirus situation, especially on the domestic front where several sports events have been cancelled. Disneyland closed its doors yesterday as a result of the spreading coronavirus outbreak.
The Dow’s recovery brings it close to the support-turned-resistance price level at 22253, which is where previous highs of 7 August 2017 and 11 September 2017 are located. Further price recovery could target 26248 (5 Feb 2018 and 7 Jan 2019 lows), or 23961, where the 38.2% Fibonacci retracement level from 17 Feb’s swing high to 9 March’s swing low is located.
On the flip side, further downside may result if the price recovery gets truncated at the current resistance level. This could create an opportunity for a retest of 21636 and 21078, with this week’s support at 20398 also becoming relevant if downside momentum gets stronger.
The steepness of the price moves leaves very little price action for pattern formation, which throws up the use of support-resistance price levels as the most accurate method of determining further price movement of the Dow Jones futures asset on either side.