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The Dow Jones Industrial Average closed the day slightly lower at 17,540.81. US index saw a strong opening on the back of weaker-than-expected US employment figures and up beating earning reports in the service sector, but gave up all of its intraday gains to close the day down 9 points.
The index came under pressure after the Bank of America downgraded Apple to “neutral” from “buy” and lowered their price target to $ 130 from $ 142.
Technically, the downward potential remains strong as the index is well below a bearish 20 SMA, while the technical indicators remain in negative territory, barely bouncing from oversold levels. Also the index has closed the day below the 23.6% retracement of its latest daily decline, still a strong intraday resistance, at 17,570.
Talking about the shorter term view, the 20 SMA heads sharply lower well above the current level, while the technical indicators hover below their mid-lines, lacking clear directional strength at the time being.
The index needs to break below Monday’s low of 17,490, to confirm additional declines towards the 17,394, where the index will complete a full 100% retracement to the low set last July 27.
Meanwhile the FTSE 100 surged 0.98% and closed the day at 6,752.41, with the mining sector leading the way higher, amid positive Chinese data, the world’s largest importer of raw materials. China’s Services PMI surged to 53.8 in July from a previous reading of 51.8, bringing some relief to the markets after some poor manufacturing figures released earlier this week.
The overall positive tone in the FTSE was not enough to confirm a longer term continuation, as the daily chart shows that the index retreated from its 200 DMA, whilst the Momentum indicator continues heading lower below the 100 level, and the RSI indicator heads slightly higher around 54, which at least should help in keeping the downside limited.
If we look at the shorter term picture, the 4 hours chart shows that the technical indicators have lost their upward strength, and that the Momentum indicator is approaching the 100 level. Above 6,770 the upside will look more constructive, with scope then to extend its advance up to the 6,884 level, June 24 daily high.