Dow Jones Technical Analysis: The Index is Receiving a Positive Boost – 21 February 2023

The movement will return to the index with the resumption of trading in the US markets after a long holiday week due to President’s Day. Inflation and the strong US economy may put the Federal Reserve on the path of more interest rate hikes and for longer periods of time than previously expected, especially after Economic data week which indicated rising inflation, a strong labor market, and resilient consumer spending.

In light of this, analysts at Goldman Sachs and Bank of America expected three more interest rate increases this year by a quarter of a percentage point each. Higher than their previous estimate of only two interest rate hikes, while most investors expect at least two additional interest rate increases and believe that the interest rate will peak at 5.3% by July as the central bank tries to calm the economy and reduce inflation.

Looking ahead, the PCE price index will complete the overall picture, as economists expect core PCE on a year-on-year basis to decline by 10 basis points to 4.3%. Markets await minutes from the minutes of the latest Federal Reserve meeting later Wednesday.

Technically, the index found some positive support after relying on its simple moving average for the previous 50-day period, which gave it positive momentum for this recent rise. Considering its attempts to form a positive technical pattern in the short term, which is the symmetrical triangle pattern, as shown in the attached chart for a period (daily). The recent rise in the index came despite the presence of negative signs in the relative strength indicators.

Therefore, our expectations suggest more rise for the index during its upcoming trading, to target once again the pivotal and stubborn 34,281.36 resistance level, in preparation for attacking it.