The Dow Jones futures are up slightly this Monday, as are other Asian and European markets, after the record-setting plunge in Chinese factory activity has elicited promises of support from global central banks.
The Dow Jones futures are trading at 25236, slightly off intraday lows of 25088 after the US Fed’s Chairman pledged to “use our tools and act as appropriate to support the economy”, noting that the coronavirus was a risk to economic activity. The Bank of Japan issued a similar statement of support.
The Dow Jones futures asset bounced off the identified support level of 24922 on Friday, pulled back upwards and found resistance at the lower border of the pitchfork. Today’s candle opened moderately lower, but the market sentiment turned bullish intraday and enabled the Dow to locate support close to Friday’s support line.
Overhead resistance resides at the 26130 price level, where previous highs of 12 November 2018 and 4 March 2019 were found. This resistance level is also the site of an earlier low of 7 October 2019. For any price recovery to get to this level, there must be a push above the resistance zone that extends from the present price level to the lower boundary of the pitchfork.
If the price can breach this resistance zone, it could continue on the recovery path beyond the 26130 price level, and possibly on to 26723.
On the flip side, a break below the 24922 support level opens the door towards the lows of 9 April/25 June 2018, which reside at the 23961 price level. Further downside action which breaches this price level could then target the 26248 price level as well.