Dow Jones Technical Analysis: The Index Consolidates its Gains – 14 February 2023

The index advanced on Monday, recovering from losses recorded during most of the past week, as investors looked forward to key consumer inflation data due later in the day.

There is high interest in Tuesday’s release of the CPI for January, economists are looking ahead that the CPI will show a monthly rise of 0.4%. We would see the annualized rate fall to 6.2% from 6.5% in December after it was reported It peaked at a nearly 40-year high of 9.1% last summer. The core rate excluding volatile food and energy prices is expected to slow to 5.4% year-on-year from 5.7% in December.

The upcoming Consumer Price Report is a flashlight that will shed light on how well the Federal Reserve’s interest rate increases have curbed inflation.

Meanwhile, Fed Governor Michelle Bowman was among the latest officials to warn that interest rates will need to continue to rise.

Technically, the index found positive support after it was based on the support of its simple moving average for the previous 50-day period. This coincided with its reliance on a minor and upward corrective slope line in the short term, as shown in the attached chart for a period (daily).

In the middle of that, a cross has begun to appear Positive again with the relative strength indicators, after reaching exaggerated oversold areas compared to the index’s movement. It gives it more positive momentum, to attack the pivotal and stubborn 34,281.36 resistance level in its last trades.

That is why our positive expectations surrounding the index will continue during its upcoming trading, especially if it breaches the aforementioned 34,281.36 resistance, to then target the first resistance levels at 35,361.36.

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