FxWirePro: Dow maybe heading towards a test of 20000 area

Recent bullish sentiment in the market, which surprised many analysts and traders as it came in contrast to the popular belief that the out vote in the UK referendum would cause a financial havoc. Instead S&P 500 and Dow Jones Industrial Average (DJIA) went up after the initial jolt to challenge the all-time highs and set new records.

We expect that this bullish sentiment, which has been fuelled by many factors, such as

• Lower rates for longer from the U.S. Federal Reserve
• China avoiding a hard landing so far and likely to do so in 2016
• Oil price recovery along with other commodities
• Brexit referendum storm was caused less havoc to sterling and currency market than expected
• Fresh stimulus hopes from the Bank of England (BoE) and Bank of Japan (BoJ)
• Wishful thinking that the UK would finally remain in the European Union through a second referendum

Would continue further and will keep the upbeat mood surrounding the equity market.

Hence we expect, the Dow to benefit more than European markets due to looser link to Brexit uncertainties.

Dow Jones (DJIA), which is currently trading at 18540, likely to test resistances around 20000. Key supports are at 17700 and at 17000. There could be profit bookings at 18900 area.