Dow Jones Forecast: Testing the 200-Day EMA

• The Dow Jones Industrial Average has been relatively quiet during the training session on Friday, sitting right around the 33,000 level.
• We also have seen a lot of action in this area previously, so therefore it’s likely that we would see a lot of buyers in that general vicinity.
• Furthermore, you also have the 200-Day EMA in that same area, so it all ties together quite nicely to give you an opportunity to find buyers.

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If we were to break down below the 32,500 level, then it’s possible that we could send this market much lower. In that scenario, it’s more of a “risk off” type of situation, therefore it’s likely that we could break down drastically at that point, as it would open a bit of an air pocket underneath. The 32,000 level could offer a little bit of support but breaking down below there then opens the possibility of a move all the way down to the 30,000 level.

Noise Ahead

On the other hand, if we turn around a break above the 50-Day EMA, then it is likely that we could go looking to the 34,000 level above. The 34,000 level has been a significant amount of resistance in the past, so if we turned around a break above that, it would obviously be a very bullish sign, but I would assume that it would also coincide quite nicely with several other markets taken off to the outside such as the S&P 500, and perhaps even the NASDAQ 100 which has taken a bit of a beating as of late as well.

We are during earnings season, so it’s likely that we will continue to see a lot of noise, and of course, everybody’s out there worrying about what the Federal Reserve is going to do next. There are a lot of people on Wall Street that are trying to keep themselves convinced that the Federal Reserve is either going to slow down its rate hikes, or perhaps even pivot. Because of this, there are always people out there willing to buy stocks. On the other hand, the Federal Reserve has stated quite explicitly that they are going to stay tight for longer, so that could really send things lower. We are heading towards a recession, which obviously will influence industries as well.

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