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Dow Jones, DAX & Gold Price Technical Analysis on Fed Day

Dow Jones, DAX & Gold Price Technical Analysis on Fed Day

2019-07-31 12:01:00
Paul Robinson, Strategist

Today the Fed is expected to cut rates by 25-bps with a small chance at a 50-bps cut. Either way markets are expected to make moves, especially if the latter happens. The Dow Jones is consolidating at a long-term resistance line, while the DAX in Europe is sitting on trend support. Gold continues to chop sideways but anticipated to validate or reverse a recent pattern breakout.

Technical Highlights:

  • Dow Jones consolidating at big resistance
  • DAX testing the June trend-line
  • Gold price looking to make or break

Make more informed decisions by checking out our trading forecasts and educational resources on the DailyFX Trading Guides page.

Dow Jones consolidating at big resistance

The Dow is hanging out just below the top-side trend-line running over the January 2018 peak. This has the market in a state of limbo as price action isn’t showing much weakness, but resistance is acting formidable. Tactically speaking, waiting to do anything until after we see how the market reacts today may be the most prudent move.

The Fed is expected to cut by 25-bps, so the reaction may not be that sizable, however; a cut of 50-bps and the market is likely to become volatile. Of interest will be how the market treats the highly anticipated rate cut, especially if the bigger cut is made. A failure to rally or at least hold a rally for long may be a big sign that the market wants to turn lower. In ‘wait-and-see’ mode on this end.

Dow Jones Daily Chart (strong but at top-side t-line resistance)

Dow Jones, DAX & Gold Price Technical Analysis on Fed Day

DAX testing the June trend-line

The DAX sold off strongly yesterday, putting it down on the trend-line rising up from the June low. Price action at this time isn’t encouraging for it to hold, but there is time for that to change. We will have to wait until tomorrow for the reaction out of Europe to the Fed given that the markets will be closed. A sizable gap tomorrow morning could develop and help provide a better indication as to whether German stocks want to hold or fold.

DAX Daily Chart (looking for new highs soon…)

Dow Jones, DAX & Gold Price Technical Analysis on Fed Day

Gold price looking to make or break

Gold broke out of a wedge back on the 17th and is so far holding onto the top-side trend-line of the pattern. It will be important for it to maintain the wedge breakout if it is to continue higher, because a failure to hold a pattern breakout can lead to a sharp move in the opposite direction. For now, support is support until it isn’t. Today could end up being an important moment for the precious metal.

Gold Price 4-hr Chart (hold or fold the wedge?)

Dow Jones, DAX & Gold Price Technical Analysis on Fed Day

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---Written by Paul Robinson, Market Analyst

You can follow Paul on Twitter at @PaulRobinsonFX

DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.