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Dow Jones Technical Analysis: The Index is Rising on its Current Support – 21 March 2023

The Dow posted its best day since January, despite banking troubles and an uncertain path for the Federal Reserve to raise interest rates.

The Dow Jones Industrial Average rose during its recent trading on intraday levels, to achieve gains in its last sessions by 1.20%.It gained about 382.60 points and settled at the end of trading at the level of 32,244.59.This happened after the index fell during Friday’s trading by -1.19%, at the end of a week in which the index fell slightly by -0.15%.

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The Dow posted its best day since January, despite banking troubles and an uncertain path for the Federal Reserve to raise interest rates. Investors appeared to be on edge over recent efforts to fend off a potential global banking crisis ahead of the Fed’s interest rate decision.

The Fed faces a dilemma at its policy meeting on Tuesday and Wednesday, as it tries to balance its battle against inflation and concerns about the stability of the financial system. Fed fund futures traders who braced earlier this month for a 50 basis point rate hike, or half a percentage point, now see a 26.9% chance that policymakers will leave rates unchanged on Wednesday, and a 73.1% greater chance of raising them by about 25%. basis point or a quarter of a percentage point.

Meanwhile, shares of First Republic Bank FRC closed down another 47% on Monday, after the troubled bank’s rating plunged deeper into junk territory over the weekend. S&P Global Ratings said the rescue package rolled out last week that $30 billion does not solve the bank’s “big business, liquidity, financing, and profitability challenges”, sending First Republic shares down 90% this year.

Technically, the index found some support after basing it on the important 31,727.00 support level, supported by the influx of positive signals in the relative strength indicators, after earlier reaching oversold areas, for the index to try to compensate for some of its previous losses. Considering its trading along a bearish sub-slope line in the short term. This is shown in the attached chart for a period (daily), with continued negative pressure for its trading below the simple moving average for the previous 50-day period.

That is why we expect the index to return to decline during its upcoming trading, as long as the 32,582.00 resistance remains stable, especially if it breaks the aforementioned 31,727.00 support, to then target the support level at 30,454.50.

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