Dow Jones Technical Analysis: Sitting on Important Support

We still expect the index to rise again during its upcoming trading.

The Dow Jones Industrial Average declined during its recent trading at the intraday levels, recording losses for the second day in a row, by -0.42%. It lost by 144.67 points, to settle at the end of trading at the level of 34,496.52, after declining in Tuesday’s trading by -0.80%.


Half of the index’s 30 components fell, with 15 stocks ending trading in the red, led by Salesforce Inc. by -4.44% and Microsoft Corp. By -3.66%, while on the other hand, UnitedHealth Group Inc. was the top gainer in percentage terms by 2.70% and Johnson & Johnson shares by 2.60%.

The stock market fell even though it regained some early losses on Wednesday, after minutes from the Federal Reserve’s last meeting showed that a half-point rate increase is possible with a good chance of it reducing its balance sheet soon.

The March minutes showed that Fed members see a 0.5 percentage point short-term rate increase as a strong possibility soon. The central bank had reported the possibility a few weeks ago, and markets had been expecting the Fed to raise its benchmark lending rate to nearly 3% over the next two years.

The Fed also indicated that it is likely to reduce the size of its balance sheet by reducing its holdings of bonds in the near future. The bank said it could reduce its bond holdings by about $95 billion a month. Lower demand for bonds means lower bond prices and higher yields.

Technically, the index is trying to gain positive momentum that might help it recover and rise again, amid the influx of negative signals on the relative strength indicators, even if we notice that they reach very oversold areas, and exaggeratedly compared to the movement of the index.

The index reached its last decline to rely on the important support level 34,352.96, and this coincided with its support as well as its simple moving average for the previous 50 days.

In light of the dominance of the main bullish trend over the medium term, with it being affected by leaving the range of a bearish corrective price channel that was limiting its previous trading in the short term, as shown in the attached chart for a period of time (daily).

That is why we still expect the index to rise again during its upcoming trading, especially in the event that support remains stable at 34,352.96, to target the first resistance levels of 35,631.

Dow Jones Industrial Average Index

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