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Dow drops on US fiscal concerns, natural gas futures keel over as EUR/JPY slips
Dow drops on US fiscal concerns and rapidly rising Treasury yields while natural gas futures resume their descent as EUR/JPY slips.
Dow is seen dropping
Having reached a 2 1/2 month high at 42,842, marginally above its 42,821 late March high, the Dow Jones Industrial Average has fallen back below its 200-day simple moving average (SMA) at 42,318 close to last week's low at 41,778 on US fiscal concerns.
The index is expected to come further off and fill its 41,899 to 41,512 early May price gap and may also revisit its 55-day SMA at 41,134 and its April-to-May uptrend line before recovering.
Minor resistance above the 200-day SMA at 42,318 can be spotted at Tuesday-to-Wednesday's price gap at 42,439-to-42,485.
EUR/JPY expected to decline further
EUR/JPY's recent decline from its mid-May high at ¥165.21 is taking it through its March-to-May uptrend line at ¥162.56 with the 55-day SMA and 19 May low at ¥162.18-to-¥162.15 about to be reached.
These are likely to soon give way with the late April-to-early May lows at ¥161.71-to-¥161.60 expected to soon be reached, as well as the 200-day SMA at ¥161.40. The 22 April low at ¥160.99 may also be reached. If fallen through, a more significant top may be formed with the early April low at ¥158.31 being back in sight.
Immediate downside pressure should remain in play while Wednesday's high at ¥163.41 isn't overcome.
Slightly above this level minor resistance may be found around the 25 April high at ¥163.75 ahead of key resistance at ¥164.18-to-¥165.23, made up of the December-to-May highs.
Natural gas futures under pressure
US natural gas futures prices are in the process of keeling over and slipping back towards their 200-day SMA at 276.4. Below it support can be spotted at the 19 May low at 266.7.
Were this level to be slipped through, the 25-to-28 April gap at 260.5-to-255.3 would likely get filled before the April low at 244.00 may be revisited.
Were Wednesday's high at 300.5 to be exceeded, though, the above scenario would likely be delayed while the March-to-May downtrend line at 310.8 may be probed. Slightly further up meanders the 55-day SMA at 315.3 which may also act as potential resistance as well as the 9 May peak at 326.1. While the latter level caps, the medium-term downtrend remains valid.
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