The Dow Jones is Again Trending Downward

Fundamentals

The UK construction PMI was published yesterday. The number hit 53.1 versus a forecast 52.1.
The ADP jobs report was also released in the US on Wednesday at 12:15 pm GMT. The number was 1,000 lower than the forecast 178,000.
Today the focus should be on the UK services PMI, which will come out at 8:30 am GMT.
Also at that time the change in the M4 money supply will be published in the UK, along with the volume of individual net borrowing. The previous figure was 4.9 billion. This time analysts are predicting a drop in borrowing to 4.5 billion GBP.
Thursday’s data on initial US jobless claims will come out at 12:30 pm GMT as usual. The number of applications is expected to drop to 246,000.
Traders will be listening at 3:30 pm GMT to remarks from ECB President Mario Draghi and, a bit latter at 8:25 pm GMT, to those from Bank of Canada Governor Stephen Poloz.

Stocks

The corporate reports we focus on today are from CBS, the US television network, and HSBC, the huge financial conglomerate.
The Dow Jones Industrial Index has started falling again. We cannot rule out that the decline is aimed at closing the April 25, 2017 gap at 20,800 points. The big question is whether the bears will go and close the first gap from April 24, 2017. On the daily charts, the index came right up to the 9-EMA. At present one might say that the trend is sideways, but it all might change if the MA breaks through top down.
Russia’s MICEX Index is also testing the 9-day EMA. The index also broke through the 61.8% Fibo retracement, but the breakthrough might be a false one (the candlestick has not yet emerged from this range even at 50%).

Currency Market

The ADU/JPY pair is now seeing the aussie in a correction. Indeed, if the correction continues, we can forget about the pair being in a trend impulse. If the aussie is in the 4th correction wave, then it may not enter 1st correction wave territory. If this scenario proves wrong, we can expect a correction to 83.30 and then to 83 yen per aussie. If growth resumes, the first target might be 84.80 yen, then 85.50 yen per aussie. Technically, the formation of a bearish rounded top on the weekly charts and the lack of a 9-EMA breakthrough are perplexing. Appel’s MACD, which has started to rise, points toward growth. But the bullish signal is very faint.
The EUR/JPY pair’s fairly strong growth might lead to a technical correction. Noteworthy among the signals confirming this is the MACDF, which is diverging from the price chart, warning of a possible reversal. On the weekly charts the resistance is at 125 yen per euro, but it is quite possible that we’ll see movement toward this target only after a correction.

Nikolay Dudchenko, Olymp Trade analyst.

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