- The Dow Jones Industrial Average extended its gains during its recent trading at the intraday levels, to achieve sharp gains for the second consecutive session by 1.34%.
- It added to the index about 417.06 new points, and to settle at the end of trading at its highest level in more than one hair at the level of 31,499.63, after rising during trading last Friday by 2.47%.
- Last week the index recorded the strongest weekly gain since last June by 4.9%.
The start was with economic news as the manufacturing PMI fell to 49.9 in October from 52 in September, which is lower than the 51 expected in a Bloomberg poll and is an indicator of contraction in the sector. The drop to a 28-month low after regional manufacturing sector readings from the Federal Reserve Bank of New York and Philadelphia also indicated factory contraction.
Those data and a Wall Street Journal article last Friday that said the Federal Reserve would likely use its November meeting to discuss whether to scale back the December rate hike are the reasons the stock market continues to rally. Investors are becoming more optimistic that the Fed will back down from its very hawkish policies.
Dow Jones Technical Analysis
Technically, the index’s rise comes because of being affected by a positive technical structure formed earlier in the short term. This is the double bottom pattern, as shown in the attached chart for a (daily) period, with its trading stability above the ceiling of this pattern. This is represented by the pivotal support level 30,454.46, to succeed in its rise. The latter in getting rid of the negative pressure of the simple moving average for the previous 50 days, which gives it more positive momentum to continue those gains.
But on the other hand, the dominant trend remains the bearish corrective trend in the short term and along a slope line, as we notice the start of negative signals on the RSI indicators, after reaching overbought areas. This may hinder the index's rise in its upcoming trades.
Therefore, our expectations indicate more ascent for the index during the upcoming trading, provided that the 30,454.46 support level remains intact, to target the 32,272.64 resistance level as a price target for the formed double bottom pattern.
Ready to trade our US 30 technical analysis? We’ve made a list of the best online CFD trading brokers worth trading with.