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Dow Jones Technical Analysis: Index Closes Cautiously Higher – 07 November 2022

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The Dow Jones Industrial Average rose during its recent trading at the intraday levels, to break a series of losses that continued for four consecutive sessions.


The Dow Jones achieved strong gains in its last sessions, by 1.26%, to gain about 401.97 points, and to settle at the end of trading at the level of 32,403.23. This happened after its decline -0.46% in Thursday, but despite that, the index recorded weekly losses of -1.40%.

Investors digested the mixed jobs report which raised hopes that the Federal Reserve will shift interest rates in the future to less severe degrees.However, the Nonfarm Payrolls report also showed that average hourly earnings rose 0.4% in October versus expectations of 0.3%, while job growth was stronger than expected.

The report was a major area of focus for markets after hawkish comments from Federal Reserve Chairman Jerome Powell on Wednesday, which raised concerns that the central bank may continue to raise borrowing costs for longer than previously expected.

The non-farm payrolls report also comes on the heels of a conflicting set of data, which although it indicated a slowdown in certain sectors of the economy but at the same time highlighted the resilience in demand for labor in the US despite the Fed’s aggressive policy moves to control on inflation.

Traders’ bets on a 75bp rate hike in December rose briefly after the jobs report, but then eased back to split between the odds of a 50bp and 75bp hike.

Technically, the Dow Jones’ rise comes with the support of its continuous trading above its simple moving average for the previous 50 days. The index remains suffering from negative pressure due to its trading along a corrective bearish trend line in the short term, with the start of negative signals in the relative strength indicators. This happened after they reached areas of severe saturation with buying operations, as shown in the attached chart for a period (daily).

Therefore, our expectations suggest a return to the index’s decline during its upcoming trading, as long as the resistance remains at 33,272.34, to target the first support levels at 31,598.60.

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