Dow Jones Technical Analysis: Index Deepens its Losses

The Dow Jones Industrial Average declined during its recent trading at the intraday levels, to record losses in a session characterized by volatility by -0.13%. It lost about -38.29 points and settled at the end of trading at the price of 29,888.79. This is after its increase in its decline in trading on Thursday amounted to -2.42 %. During the past week the index recorded losses for the third consecutive week, by -4.79%.

Advertisement

Global financial markets moved in an attempt to price the latest action from the Federal Reserve last week, when the Federal Reserve raised the US benchmark interest rate by 75 basis points. This dampened inflation expectations and possibly restoring some credibility to the institution, however the effect was on stock markets.

Next week’s data will reveal more information on growth rather than inflation as has been the case for the past two weeks.

Last Friday morning, investors heard Chairman Jerome Powell deliver an opening speech at the opening conference on the international roles of the US dollar. Mostly about the dollar’s role as the world’s reserve currency, his comments did not offer new insights into the prospects for monetary policy.

Minneapolis Federal Reserve Chairman Neil Kashkari said in a blog Friday that he could support a 75 basis point rate hike in July. He wrote that a “prudent strategy” after the July meeting would be to continue raising interest rates by 50 basis points until inflation is “on course to fall” to 2%.

Technically, the index continues to decline along with a bearish corrective trend line in the short term, as shown in the attached chart for a period of time (daily). This is with the continuation of negative pressure for its trading below the simple moving average for the previous 50 days. In front of that we notice the beginning of a positive crossover on the RSI indicators, after reaching oversold areas, which helped limit the index’s recent losses.

Therefore, our expectations indicate that the index will continue to decline during its upcoming trading, as long as the main resistance 31,000 remains intact, to target the support level 28,958.