Dow Jones Technical Analysis: Index is Back Down

The Dow Jones Industrial Average returned to decline in its recent trading at the intraday levels, to record losses in its last session. It fell by -0.10%, to lose about -28.34 points, and settle at the end of trading at the level of 29,210.86. This happened after rising 0.12% during Tuesday’s trading.

The minutes of last month’s meeting showed that FOMC members expected higher interest rates to remain stable until inflation falls further. To curb high inflation, the Federal Open Market Committee last month provided a third consecutive increase of 75 basis points to the benchmark lending rate, raised it to a range of 3% to 3.25%, and indicated more hikes in upcoming meetings.

The minutes showed that “participants noted that inflation remained unacceptably high and well above the committee’s long-term target of 2%.”.

In other economic news, the US Producer Price Index rose 0.4% in September, after a 0.2% decline in August, faster than the expected 0.2% increase.

Technically, the index suffers from the continuation of negative pressure due to its trading below the simple moving average for the previous 50 days.This happened with the start of the influx of negative signals in the relative strength indicators, after they reached areas of severe overbought. This was exaggerated compared to the movement of the index, to be what is known as negative divergence, which doubles of the negative pressures on the upcoming index trading.

This also comes considering the dominance of the short-term corrective bearish trend along major and minor slope lines, as shown in the attached chart for a (daily) period.

Therefore, our negative expectations surrounding the index are still valid, especially throughout its stability below the 29,653.30 resistance level, to target the 28,402.50 support level.

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