Dow Jones Technical Analysis: Index Closes Cautiously Higher

We expect the index to return to decline during its upcoming trading.

The Dow Jones Industrial Average rose during its recent trading at the intraday levels, to achieve gains in its last sessions by 1.05%, to add the index to it about 321.83 points. It settled at the end of trading at the level of 31,097.27, after it declined slightly during Thursday’s trading by -0.82 %. During the past week, the index fell by -1.28%.

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The Dow Jones Industrial Average’s 15.3% drop in the first half of this year was the worst since 1962, pressured by continuing concerns that central banks’ moves to raise interest rates in response to persistently high inflation could lead to deflation in many advanced economies, while stocks closed On Friday’s gains ahead of the Independence Day holiday at the start of the week on July 4, the ISM report showed that high inflation remains a major problem for manufacturers, despite easing price pressures. Meanwhile, the new orders sub-index fell into contraction territory, confirming concerns about a slowing economy.

While the ISM index supports fears that severe Fed tightening will lead to a sharp slowdown in the economy, details suggest that the slowdown could lead to a faster decline in inflation than many now assume.

Investors this year have been concerned about the possibility that the Federal Reserve will cause a recession by raising its benchmark interest rate too quickly as it tries to tame high inflation.

Technically, the index’s rise was supported by the influx of positive signals by the relative strength indicators, but we note that it reached areas of oversaturation with purchases, and it is in exaggerated areas compared to the movement of the index, in light of the control of the short-term bearish corrective trend along a slope line, with the negative pressure continuing for its trading below hte simple moving average for the previous 50 days, so that the index is trying with this rise to compensate for some of its previous losses.

Therefore, we expect the index to return to decline during its upcoming trading, as long as the resistance level 31,885.09 remains, especially if it is stable below the 31,000 level, to target again the support level 29,653.30.