Chinese equities slumped more than 2.5% after government mouthpiece said the nation is likely to see an “L shaped” recovery. An L-shaped recovery means a plunge in key economic measures followed by a period of flat growth.
However, European equity markets are not worried about “L shaped” recovery. Moreover, an “L shaped” is any time desirable than a hard landing and thus is a good news of sorts to the markets. No wonder then the Dow are indicating the index is likely to open 38 points or 0.22% higher on the day.
The economic calendar is light today. Oil prices are trading moderately higher as well, with little reason for a sudden shift in sentiment ahead. Consequently, a positive start in DJIA to this week’s trading is likely.
Pattern – Possible head and shoulder
Support – 17,648, 17,587, 17,492
Resistance – 17,811, 17,901, 18,000
- Sharp rise on Friday has increased odds of prices extending gains this week towards 17,900 are, where a failure could result in a head and shoulder formation.
- As for today, sideways to positive action could be seen, given the hourly 50-MA (despite being breached) is still sloping downwards.
- On the downside, 17,651 is a support to watch out for, which of beached would expose 17,590 levels.