Hello financial market friends! I have here the update on my analysis on the Dow Jones Industrial Average (^DJI). This index is looking good, well at least based on its chart. The last time I mentioned about this was last October 11 during the Columbus day, kindly check this post. Also, if you want to check the one last September 22, it’s in this post. Earlier, the Fed planned to pump $600 billion into the financial system to stimulate the economy in large part by lowering mortgage and other interest rates. This could be good for the US stocks and bonds. However, it won’t be favorable for the US currency as US Dollars could turn out flooding the market. The report prompted different currencies to strengthen against the weakening US Dollar (here’s the analysis). For example, 1.00 Australian Dollar is now equal to 1.008 US Dollar when they were just at parity the other day (kindly see this post). On a side not, the Federal Funds rate was decided to be held at 0.25% which they have been doing lately and will be continuing to do until it’s sure that the US economy is growing. Although, this raises inflation concerns to other analysts. The market turned out to be extremely volatile during the Fed rate decision and the FOMC statement.
Chart-wise, my outlook on the Dow Jones Industrial Average, which is one of the US market benchmarks, could be bullish. As for my technical analysis, I spotted this 2-year cup and handle formation. By the way, a cup and handle formation is naturally bullish, it could be a reversal or a continuation pattern as well. The only way to find out if the pattern is indeed a cup and handle if the index moves past above the neckline. If it does, it could rise and find some selling pressure at the next resistance around the 12,000.00 psychological level. Furthermore, if that marker gets cleared out, the next resistance it could aim for is around the 13,000.00 area. On the opposite note, in case the ^DJI fails to resume its ascend, the significant support could be the 11,000.00 psychological level. If that fails to hold the index from further declining, the next support could be the 19-month uptrend.