2016-10-28 12:32:26

Review and dynamics
The USD continues to rise steadily in the currency market, which causes decline in the safe-haven assets and stock markets.

At the end of this month US stock indices are in the red. Today is the last day of the trading week the month and traders adjust positions, also keeping in mind that at the beginning of the American session, American GDP for Q3 will become known. It is expected GDP will grow by 2.5% against 1.4% in Q2. If the forecast will be correct, investors’ expectation of the rate hike in the US will increase and the position of the USD will strengthen, while pressure on the American stock market will increase.

The index has been declining after the record highs at the level of 18620 reached in the summer. Since the beginning of this month the index fell by 1% or about 170 points.

Our opinion
With the opening of today's trading day the index has been declining to the nearest support level of 18055 (ЕМА144 on the daily chart), at the lower line of the range of 18055 and 18375.

Activity in the American stock market may drop in advance of the Presidential elections on 8 November

If uptrend in the index maintains, the decline in the index may continue up to support levels of 18055and 17920 (ЕМА200 on the daily chart and Fibonacci 23.6% after the rise of 15660 in February, which followed after significant decline at the beginning of the year).

On the daily chart the lower line of the ascending channel is between these levels. The upper limit of the channel is near the level of 18520.

Strong support levels are 18055 and 17920. It is unlikely that the pair will break them down at the first attempt. It is possible that the price will bounce and go up to the levels 18180, 18280 and 18375 as part of the correction.

The index and the U.S. stock market will be strongly affected by the fundamental factors, especially by the US monetary policy and the plans of the US Fed to introduce monetary policy tightening.

If the index breaks down the level of 17290 the decline in the index may continue. Consolidation of the price below the level of 17490 (Fibonacci 38.2 and ЕМА200 on the weekly chart) will trigger the decline in the DJIA in the downtrend.

On 4 - hour, daily and weekly charts the indicators OsMA and Stochastic give signals of the decline in the index. On the monthly chart the indicators give signals for short positions.

Support levels: 18055, 17920, 17700, 17490, 17380 and 17150.
Resistance levels: 18280, 18375, 18435, 18450, 18500 and 18620.

Trading tips
Buy Stop: 18200. Stop-Loss: 18120. Take-Profit: 18280, 18375, 18435, 18450, 18500 and 18620.
Sell on the market. Stop-Loss: 18200. Take-Profit: 18055, 17920, 17700, 17490, 17380 and 17150.

Support level of 17920
Support level of 17920

Indicators give sell signals
Indicators give sell signals