Bullish breakout on the menu for Dow futures?
Traders should be on alert for a bullish breakout in Dow E-mini futures.
Sitting in a triangle and having found plenty of support on dips towards and below 39400 over recent weeks, the price closed marginally above downtrend resistance on Wednesday, managing to do what it was unable to on the prior three ventures above the level. With RSI and MACD providing bullish signals on momentum, the ducks are lining up for upside.
Should Wednesday’s high of 40067 be taken out, consider buying the break with a stop loss order below the former uptrend for protection. Resistance may be found around 40200 but it’s likely the record high 40358 will be targeted by bulls should we see a breakout. Beyond, a trip into the low 40000s could be on the cards given how long the price has been coiling in the triangle.
Thursday’s US inflation report presents a major risk event that could deliver a bull trap and/or reversal, underlining why a stop needs to be used to limit capital losses from an ugly number. A core reading of 0.25% more is unlikely to go down well for riskier asset classes. Alternatively, a figure below 0.2% will likely be cheered as it would strengthen the case for the Fed to begin cutting interest rates in September.
While the Dow is not a cyclical as it once was, improved prospects for steeper bond curves and a soft economic landing should benefit financials and other economic sensitive sectors.
DS
Sitting in a triangle and having found plenty of support on dips towards and below 39400 over recent weeks, the price closed marginally above downtrend resistance on Wednesday, managing to do what it was unable to on the prior three ventures above the level. With RSI and MACD providing bullish signals on momentum, the ducks are lining up for upside.
Should Wednesday’s high of 40067 be taken out, consider buying the break with a stop loss order below the former uptrend for protection. Resistance may be found around 40200 but it’s likely the record high 40358 will be targeted by bulls should we see a breakout. Beyond, a trip into the low 40000s could be on the cards given how long the price has been coiling in the triangle.
Thursday’s US inflation report presents a major risk event that could deliver a bull trap and/or reversal, underlining why a stop needs to be used to limit capital losses from an ugly number. A core reading of 0.25% more is unlikely to go down well for riskier asset classes. Alternatively, a figure below 0.2% will likely be cheered as it would strengthen the case for the Fed to begin cutting interest rates in September.
While the Dow is not a cyclical as it once was, improved prospects for steeper bond curves and a soft economic landing should benefit financials and other economic sensitive sectors.
DS
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