DOW gapped down overnight and hit as low as 27325.13, before closing at 27502.81. It closed down -1.01% or -280.23 pts. The index is now drawing support from a key near term cluster support zone, between 38% retracement of 25743.46 to 28174.97 at 27246.13 and 55 day EMA (now at 27323.78).
We’d expect some strong support from the current level to bring rebound, to form a sideway consolidation pattern. Eventually, an upside breakout through 28174.97 is expected at a later stage. However, sustained break of 27246.13 will at least bring deeper correction to 61.8% retracement at 26672.29. That would also open up the case of medium term reversal and put focus on 25743.46 key support.
