FxWirePro: Sell DJIA targeting 22500

U.S. blue-chip index, Dow Jones Industrial Average (DJIA)0 to face further decline as China steps up its own effort to counter U.S. tariff of 25 percent on Chinese goods worth $250 billion.

• China has already imposed tariffs on additional $60 billion U.S. goods in response to the latest escalation and talks in the Chinese media suggests that the government might take up specific measures targeting U.S. companies operating in China.
• Lately, there have been lots of talks in the Chinese media with regard to ‘rare earth’ minerals, which are extensively used in the United States across the business, as well as in regular appliances - computer memory, DVDs, rechargeable batteries, cell phones, catalytic converters, magnets, fluorescent lighting. In this area, China can really hurt the United States, which imports 59 percent of rare earth minerals from China, which holds the biggest reserve of rare earth minerals and world’s top producer and exporter.
• In response to the recent escalation of trade tensions where negotiations failed to yield results and both sides resorting to imposing tariffs on goods from the other, Chinese companies are asking their employees to cut back on U.S. products and services.

We expect further decline should the tariff war remain escalated.

Trade idea:

• Keep DJIA short with the following targets - 25180, 25000, 24800, 24100, 23400, and 22500. The index is currently trading at 25180 area, down almost 1600 points from the recent peak.