10:48, 02 December

US30 - Remains Under Resistance at 30000 as Economic Outlook ‘extraordinarily uncertain’

In the last few weeks the US30 index has applied lots of pressure on the key 30000 level which has stood up and resisted prices firmly keeping the index below this level for the most part. This has happened especially in the last week where every day the index has moved to 30000 attempting to push through, although it has been able to move through to a new all time high. During this time it has also been well supported by the 29000 level. In the last three weeks it has traded above this key level in a range up to 30000 and three weeks ago, the US30 index made its first run towards 30000 and in doing so, smashed through resistance at 29000, which has applied downward pressure on the index for some time. In that initial surge higher, it also pushed strongly through 27000 and 28000 which have play a significant role in the price action of the US30 in the last few months. Having supported prices for the last three weeks, the 29000 will be expected to continue to prop up the index.

Prior to the surge, it had enjoyed strong support from 26000 which its most recent fall from the resistance at 29000, which allowed the index some support to rally back higher again. The fall has followed a strong period which saw the US30 index rally very well moving from a six week low to back above the key 28000 level and towards 29000, which offered stiff resistance again. The 29000 level also provided resistance to the US30 index in early September, when it was approaching its all time high set earlier in the year, and now it has finally broken through with an increase in volatility.

For the last three months, the US index has moved mainly between support at 27000 and resistance at 29000 and with the repeated attempts to break through 29000 being thwarted, it demonstrated how significant the most recent break through is. For a few weeks in July the US30 index met resistance at another key level of 27000 whilst bouncing off support at 26000, which is why the 27000 level is now offering some support to the index.

Throughout June, the index enjoyed solid support from another key level at 25000, while receiving some resistance from 26000 remaining in a range between these levels, up until the break a few weeks ago. Throughout April and May 25000 level had turned away the index on several occasions, reinforcing how significant the 25000 level had become in this period, and it has been able to provide some strong support to the index in the last month or so. Should the index decline further, the 25000 level will be expected to continue to offer support.

Chairman of the U.S. Federal Reserve (Fed), Jerome Powell has stated that the lending programs the central bank deployed during the coronavirus pandemic has been vital in keeping the economic fallout from being worse.  U.S. Treasury Secretary Steven Mnuchin said the legislation that enabled the programs does not permit them to run past 31st December, and the Fed will be forced to return the funding that supports them.  “These programs serve as a backstop to key credit markets and have helped restore the flow of credit from private lenders through normal channels,” Powell said in prepared remarks.  “We have deployed these lending powers to an unprecedented extent.”  “As we have emphasized throughout the pandemic, the outlook for the economy is extraordinarily uncertain and will depend, in large part, on the success of efforts to keep the virus in check,” Mr Powell said. “The rise in new COVID-19 cases, both here and abroad, is concerning and could prove challenging for the next few months. A full economic recovery is unlikely until people are confident that it is safe to reengage in a broad range of activities.”