Dow Jones Technical Analysis: Index Back Down

Our expectations indicate a further decline for the index during its upcoming trading.

The Dow Jones Industrial Average returned to decline during its recent trading at the intraday levels, to record losses in its last sessions, by -0.42%, to lose the index towards -129.44 points. It settle at the end of trading at the level of 30,967.83, after its rise during Friday’s trading by 1.05%.

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Wednesday’s release of the minutes of the FOMC’s June meeting will be closely watched by investors for clues about whether there is another 75 basis point rate hike later this month, or if the Fed Some of the reasons for the high risk of recession may be waived. Since the June meeting (when the Fed raised rates 75bp) there have been poor housing market data, 15-month lows in consumer confidence, and signs the economy is entering a technical recession.

Wall Street will be looking for clues on whether the Fed has abandoned its commitment to cut inflation “at all costs” to instead engineer a soft landing for the US economy. Wall Street will also wait for the US non-farm payrolls report on Friday.

Meanwhile, the US dollar index, which measures the greenback against a basket of six major rival currencies, rose to its highest level in 20 years, while West Texas crude oil prices fell below $100 per barrel for the first time in two months.

Technically, the downward corrective trend dominates the index’s movement in the short term and along a slope line, as shown in the attached chart for a (daily) period, with the negative pressure continuing for its trading below the simple moving average for the previous 50 days, in addition to that, we notice the beginning of a negative crossover on the relative strength indicators after reaching the areas of oversaturated with purchases.

Therefore, our expectations indicate a further decline for the index during its upcoming trading, as long as the resistance level 31,885.00 remains intact, especially if it is stable below the main level of 31,000, to target the pivotal support level 29,653.30.