Dow Jones Looks Set to End 4-Day Losing Streak; Targets 29600
The Dow Jones Industrial Average looks set to arrest last week’s 4-day slump on the index with a bullish start to the week, buoyed by the renewed optimism from possible coronavirus vaccine approvals and upbeat macroeconomic data.
The US Flash Manufacturing PMI, published by Markit, indicates that private sector business activity in the manufacturing sector rose from 53.4 to 56.7 in November. This figure was better than the expected reading of 52.5. Flash Services PMI also rose from 56.9 (an upward revision from 56.0 in October) to 57.7 (versus 55.8 expected).
This improvement in private sector business conditions cemented the risky sentiment playing out in the markets on Monday.
Technical Levels to Watch
Today’s 0.68% gain on the Dow Jones Industrial average stems from the bounce on the support at 29208, which is where price found support on Friday at the 23.6% Fibonacci retracement from the swing move of 30 October to 9 November 2020.
This bounce allows buyers to aim for the 29662 resistance (11 November high), with the all-time high at 30100 still maintaining its spot as the price level for buyers to beat if the uptrend is to be re-established. This move would also continue the uptrend breakout expected of the bullish flag pattern.
On the other hand, a rejection at 29662 has to be accompanied by a breakdown of 29208 to allow for a decline that targets support levels at 28979 and 28746. The 50% Fibonacci retracement level at 27373 remains strong support. If this level gives way, then 27043 and 26403 can come into the picture as potential future targets for sellers.