Dow Jones Technical Analysis: Index is in Free Fall

Akram Adel

The Dow Jones Industrial Average slipped down in its recent trading at the intraday levels, to record losses for the second day in a row, by -1.70%, to lose about -522.45 points. It settled at the end of trading at its lowest level since last July at the level of 30,183.79, after its decline on Tuesday, trading rose -1.01%.

US stocks closed sharply lower after swinging between gains and losses earlier in the session, after the Federal Reserve raised the federal funds rate by 75 basis points for the third time in a row to a target range of 3% to 3.25%, in an expected move.

Rate cuts not expected until 2024

The FOMC statement showed that the estimate for the federal funds rate at the end of the year was sharply revised to 4.4% from 3.4% previously. Updated fund price estimates also show another tightening of 25 basis points in 2024 to 4.6% before easing back to 3.9% in 2024 and 2.9% in 2025.

The central bank added that interest rate cuts are not expected until 2024, dashing any lingering hopes that the Fed expected to control inflation in the near term, the Fed's preferred inflation measure is now seen slowly returning to its 2% target in 2025.

“No one knows if this process will lead to a recession or if so, how significant this recession will be,” Federal Reserve Chairman Jerome Powell said at a news conference after the rate decision. “It will depend on how quickly wage and price inflation pressures subside, whether expectations are still solid and also if we get more jobs available.”

He added that the chances of a soft landing will diminish if policy needs more restraint for the Fed to reach its 2% inflation target.

  • The index continues to decline along with a bearish corrective trend line in the short term, as shown in the attached chart for a period of time (daily).
  •  There is continued negative pressure for its trading below the simple moving average for the previous 50 days.
  • Negative signs are appearing on the relative strength indicators, which compounding negative pressures on the upcoming index trading.

Therefore, our expectations remain for the index to decline further during its upcoming trading, to target the pivotal support level 29,653.30, and this negative scenario will remain throughout its stability below the main resistance level 31,000.

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Dow Jones

Akram Adel
Akram has experience working in the Forex industry since 2008. He works as a trainer and lecturer for technical analysis, trading strategies, and foundations of risk and capital management. In addition, he has experience with topics in the financial markets on many well-known sites that specialize in this field. Akram currently writes for a number of sites by providing accurate and professional articles and daily reports.

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