Daily Forex Technicals | Written by Forex.com |
US stock index futures point towards a higher open on Wall Street with both the Dow and S&P 500 set to hit fresh all-time highs. Against the backdrop of sluggish growth and low inflation, the world's major central banks maintain their ultra-accommodative stance of monetary policy. This has been and will remain the major theme for the markets for the foreseeable future. Indeed, the ECB recently trimmed interest rates to just 0.25%, while comments from the Federal Reserve Chairperson-elect Janet Yellen last week suggests the Fed is no rush to reduce the pace of their asset purchases. Thus the equity markets remain in a strong uptrend, with shallow pullbacks.
At the time of this writing, the Dow is hovering around 16000. As well as a psychological mark, this level corresponds with the 127.2% Fibonacci extension of the sell-off from 15720 to 14715 we saw between September and October. On top of this, the Relative Strength Index (RSI) is currently at overbought levels of above 70. It is therefore possible that we could see some profit-taking, which could cause a healthy pullback in this strong uptrend. However should this not come to fruition then I would interpret it as an indication that the rally is extremely strong and that it has further room to the upside. In this scenario, the Dow, over the next couple of weeks or so, could potentially rise to 16340/5, i.e. the 161.8% Fibonacci level, before making its next move.
Post a Comment