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US stocks gain ahead of Fed verdict

FXStreet (Córdoba) - US indexes closed with strong gains for a second day in-a-row, with the Dow Jones Industrial Average up 140 points or 0.84%, closing the day at 16,739.35.

The S&P 500 rose 17.22 points or 0.87% to 1,995.31 while the Nasdaq gained 28.72 or 0.59% to 4,889.24.

Stocks soared after the release of US poor inflation figures, which fueled speculation that the US Federal Reserve will likely delay a rate hike for December.

The Dow Jones broke a major resistance level during the American afternoon, now a key support, the 61.8% retracement of the latest weekly slump around 16,660. With investors pricing a no-hike from the FED, a move by the Central Bank will be a tough bone to digest, and will likely imply a sharp intraday decline. But if Yellen remains on hold, the rally can extend into next week, with a recovery up to the 17,700 likely in term.

DJIA technical view

“Technically, the daily chart shows that the 20 SMA has turned higher, and stands now around the 50% retracement of the same decline in the 16,380 region, whilst the technical indicators continue heading higher in positive territory”, said Valeria Bednarik, chief analyst at FXStreet. In the 4 hours chart, the technical readings also favor the upside, as the index is well above a bullish 20 SMA, the Momentum indicator grinds higher well above 100, whilst the RSI hovers now around 70.

Support levels: 16,660 16,539 16,380. Resistance levels: 16,774 16,903 17,063.

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