- U.S. stocks ended sharply lower on Friday, with the Dow and S&P 500 posting their worst weekly performances in months, after comments from Federal Reserve official James Bullard that the U.S. central bank might raise interest rates sooner than previously expected spooked investors.
- Investor confidence in their existing positions was initially dinged by the Fed’s policy meeting, where it projected interest rate hikes would happen sooner than anticipated, and signaled it was reaching the point where it could begin talking about tapering its massive stimulus.
- Investors will also be looking to Fed Chair Powell’s testimony before a House of Representatives subcommittee hearing on Tuesday. Powell will update the committee on the Fed’s COVID-19 emergency lending and its asset purchase programs.
- Asian stocks dropped on Monday morning as investors mulled the implications of a surprise hawkish shift last week by the U.S. Fed, while the Treasury yield curve flattened further with 30-year yields dropping below 2%. Hang Seng index slumped 390 points and Nikkei 225 index plummeted 983 points.
- China on Monday announced that the one-year Loan Prime Rate (LPR) was kept unchanged at 3.85% while the five-year LPR was also held steady at 4.65%, which was in line with expectations of majority of analysts in a snap Reuter’s poll.
Dow Jones Index
(CFD Symbol: US30)
Last : 33,042
This index has been plunging lower after violating the 20EMA support on 14 June. It further violated its previous support level of 33,285 last Friday as well. This continuous freefall decline has brought Stochastic to the oversold region, but the overall outlook of this index is still bearish. MACD is also bearish. We are likely to see a further downside towards 32,320.
Sell 33,200 for 32,350 with a stop above 33,650
Hang Seng Index
(CFD Symbol: HK50)
Last : 28,396
Last Friday, price failed to penetrate above the 20EMA resistance. This index is still expected to move within a rectangle consolidation zone that ranged from 27,500 to 29,570 until either end is broken. This could hint that price is likely to test the lower end near 27,620 again. Stochastic is declining. MACD remains bullish but there was a bearish crossover.
Sell 28,550 with a stop above 28,950 for 27,850
Nasdaq 100 Index
(CFD Symbol: USTEC)
Last : 14,003
Target price :
A new high of 14,212 was created last Friday. This index could form a potential Tweezer Top reversal candlestick pattern, as well as the Double Top chart pattern. If price violates the 20EMA support at 13,860, the reversal will be confirmed and further correction towards the rising trendline support could be expected. Stochastic is currently in the overbought region. MACD is still bullish but there is a divergence warning.
Sell 14,200 for 13,880 with a stop above 14,400.
S&P 500 Index
(CFD Symbol: US500)
A new high of 4267 was created on 15 June and there was a price correction follow-through. This index could form potential Double Top chart pattern where we could see price falling towards the previous low of 4034. Stochastic is falling now. MACD remains bullish but it has given a divergence warning.
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