Stocks were reeling early in NY after Chinese tech giant, Huawei’s CFO was arrested sparking concerns it could derail the trade progress that was made over the weekend. The Dow was down 780 points and turned negative for 2018 but managed to finish the day only lower by 79.4 points. The dollar also recovered some of its losses against the Japanese yen after falling to a fresh monthly low.
The rebound in risk appetite also benefited from the Wall Street Journal report that “Federal Reserve officials are considering whether to signal a new wait-and-see mentality after a likely interest-rate increase at their meeting in December, which could slow down the pace of rate increases next year.”
Price action saw the Dow form a triple bottom pattern at around the 24,250 level. Price is now facing key resistance from the 200-day SMA, which currently trades at the 25,113 level. If bearish momentum returns and the triple bottom pattern is invalidated, we could see a run towards the 23,500 region. To the upside, 26,300 remains major resistance.