The Dow Jones Industrial Average is down by 0.2% this Wednesday ahead of the FOMC decision.
The US markets came under pressure after disappointing retail sales data. Retail sales came in at -1.1% for the month of November, which was lower than the -0.3% market expectation and also much lower than last month’s -0.1% (a downward revision). The Core Retail Sales number also fell by 0.9%, which was far worse than the previous month’s drop of 0.1% (revised lower) and less than the expected growth of 0.1% as forecast by economists.
The disappointment from the data set, which is the second straight month that retail sales have dropped, showcases the devastating impact the coronavirus pandemic in the US has had on retail businesses. Many of these businesses remain shuttered from crippling lockdowns and unable to access finance, some are folding up entirely. US lawmakers continue to disagree over the passage of a new stimulus, a clear 30 weeks after the previous window expired.
The FOMC meets today and markets want to see if the Fed will take action from the monetary policy side of things, even as the fiscal component of any stimulus continues to see a concerning lack of action from lawmakers.
Outlook for Dow Jones
The 30358 resistance continues to serve as the price level to beat for bulls. The market was rejected at this price level after a higher open and has pulled back to the support at 30101 price level, where the triangle’s upper border is found.
A breakdown of the triangle and the 29842 support, will invalidate the pattern’s bullish expectations and targets new downside price levels at 29255, with 28979 and 28746 also lining up as potential support.
On the other hand, a break above 30358 allows the Dow Jones average to pursue new all-time highs, with 31158 (78.6% Fibonacci extension) serving as the new target to the north.
Dow Jones Daily Chart