HomeLive CommentsDOW completed head and shoulder top on Fed Powell's comments

DOW completed head and shoulder top on Fed Powell’s comments

US stocks closed lower overnight and risk aversion carries on in Asian session. Investors were somewhat disappointed by Fed Chair Jerome Powell’s rejection of negative interest rates. Additionally, he’s rather cautiously pessimistic with his comments on the recovery.

In short, Powell said “the committee’s view on negative rates really has not changed. This is not something that we are looking at.” While “there are fans of the policy” of negative rates, he added, “for now, it’s not something we’re considering”. He emphasized “we have a good toolkit and that’s the one that we will be using.”

On the economy, Powell is the trajectory is “highly uncertain and subject to significant downside risks.” “There is a sense that the recovery may come more slowly than we would like, but it will come. And that may mean that it’s necessary for us to do more.”

DOW’s strong break of 23361.16 support suggests that a head and shoulder top has finally completed (ls: 24264.21, h: 24764.77, rs: 24382.09). That came after DOW failed to sustain above 55 day EMA. Deeper fall should now be seen to 38.2% retracement of 18213.65 to 24764.77 at 22262.24.

Reactions from 22262.24 should reveal whether fall from 24764.77 is a pull back. Or it’s reversing whole rebound from 18213.65. Firm break there should at least send DOW to 61.8% retracement at 20716.17, or further for a retest on 18213.65 low.

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