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Published: 22 January 2026,05:56
Daily Market Analysis New
*Trump’s tariff threats over Greenland were reversed after a negotiated deal at Davos, scrapping tariffs and confirming the familiar rhetoric-then-deal pattern.
*Risk sentiment flipped positive, with the Dow jumping nearly 600 points to reclaim 49,000, while the S&P 500 and Nasdaq gained around 1%.
*While the relief rally is constructive, a confirmed bullish continuation requires a break above Dow 49,615, with markets remaining highly sensitive to geopolitical developments.
Market Summary:
Financial markets staged a sharp relief rally after the recurring geopolitical pattern dubbed the “TACO trade” – an acronym for “Trump Always Chickens Out” – materialized, defusing a week of heightened U.S.-EU tensions. Following aggressive threats of tariffs over the U.S. bid for Greenland, President Trump announced a negotiated deal at the World Economic Forum in Davos. The agreement, reached with NATO Secretary General Mark Rutte, grants the U.S. military basing rights on “small pockets of land” and secures involvement in Greenland’s mineral resources through U.S.-backed infrastructure investment, leading to the scrapping of threatened tariffs on European allies.
The rapid de-escalation triggered an immediate reversal of the prior risk-off move. The Dow Jones Industrial Average led the advance, surging nearly 600 points to reclaim the 49,000 level, while the S&P 500 and Nasdaq Composite each gained approximately 1%. The rally validated a strategy employed by some traders to “buy the dip” on disruptive Trump announcements, anticipating a subsequent negotiation and walk-back.
The market’s swift recovery underscores its focus on outcome over rhetoric. While the “TACO trade” pattern has recurred, traders are advised to remain nimble. The bullish reversal is contingent upon the durability of the new agreement and the absence of new disruptive headlines. A clean break above the Dow’s 49,615 resistance would confirm the resumption of the bull trend. However, the heightened sensitivity to geopolitical headlines is likely to persist, maintaining elevated volatility.
Technical Analysis
The Dow Jones Industrial Average has demonstrated notable resilience following a recent sell-off, successfully defending its long-term uptrend support near the 48,550 level. The robust technical rebound after a brief test of this critical floor indicates that the broader bullish trajectory remains structurally intact, with buyers actively stepping in at a key technical confluence.
This constructive price action is supported by a discernible shift in momentum indicators. The Relative Strength Index rebounded sharply before reaching oversold territory, suggesting selling pressure was arrested efficiently. Concurrently, the Moving Average Convergence Divergence indicator has triggered a bullish golden cross at a depressed level, a classic signal that bearish momentum is subsiding and a potential reversal is underway.
The successful defense of the long-term trendline is a significant technical development that reinforces the ongoing bullish pattern. The improvement in momentum indicators suggests the corrective phase may be concluding. The immediate bias is now cautiously bullish, contingent upon the index maintaining levels above the 48,550 support. A sustained move above the 49,200 resistance would confirm the rebound’s strength and open a path toward retesting the recent highs. The bullish scenario would be invalidated by a decisive break below the 48,550 support, which would instead signal a failure of the trendline and likely precipitate a deeper correction.
Resistance Levels: 49,616.85, 50,313.35
Support Levels: 48,905.20, 48,065.00
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