Dow Jones Technical Analysis: The Index Continues to Decline – 23 February 2023
Technically, the index is surrounded by a number of negative pressures during its recent trading, on top of which is its trading along a major bearish trend line in the medium term.
The Dow Jones Industrial Average declined during its recent trading on intraday levels, to record new losses in its last sessions by -0.26%. It lost about -84.50 points, to settle at the end of trading at the level of 33,045.10 after the index fell during Tuesday’s trading by – 2.06%.
Stocks fell on Tuesday amid weak expectations from two major retailers and lingering concerns about interest rates. Fed concerns reignited during Wednesday’s trading after minutes were released from the Fed’s latest meeting, which ended with a 25-point rate hike.
The minutes showed that most Fed officials and a strong majority of policymakers agreed to slow the pace of interest rate increases, leading to a smaller 25 basis point hike in February. Indicating continuing concerns about inflation, the information also indicated that policymakers could return to a more aggressive approach if needed to tame price increases.
The release of the minutes came ahead of a series of stronger-than-expected US employment data and consumer prices. In turn, prompted markets to price in at least three more rate hikes of 25 basis points this year.
Technically, the index is surrounded by a number of negative pressures during its recent trading, on top of which is its trading along a major bearish trend line in the medium term. This is shown in the attached chart for a period (daily), with the continuation of negative pressure for its trading below the simple moving average for the previous 50-day period. In addition, we notice the continuation of negative signals on the relative strength indicators, despite reaching oversold areas.
Therefore, our expectations indicate a further decline for the index during its upcoming trading, to target the pivotal support level at 32,582.00. This negative scenario will remain valid as long as the resistance level of 34,281.36 remains intact.
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