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Analysis

Dow Jones Technical Analysis | DJIA is approaching the July high

BY Janne Muta

|November 27, 2023

Dow Jones Technical Analysis – The US equity indices rally has been remarkable. Indices have now completed their fourth consecutive week of gains. This period has been characterized by the best monthly performance for major indices like the Dow Jones Industrial Average, S&P 500, and Nasdaq Composite this year.

A key factor influencing market dynamics has been the Federal Reserve's interest rate policies. There is increasing speculation that the Fed might halt further rate hikes and could reduce rates in 2024 by four times.

At the same time signs of economic cooling, such as layoffs and reduced job growth suggest a potential easing of inflation without precipitating a recession. According to WSJ, despite recent market rallies, investor sentiment remains cautious, with record amounts of cash held in money-market funds.

This liquidity, seen as a bullish indicator by some analysts, suggests potential for further market investments if the inflation outlook improves, highlighting a cautious optimism in financial markets amidst prevailing economic uncertainties.

Summary of This Dow Jones Technical Analysis Report:

  • The Dow Jones Industrial Average (DJIA) is approaching a pivotal point, the July high of 35,680, marking a significant juncture in its weekly trajectory. This approach follows a notable rally, with the market climbing over 9% in just four weeks.
  • In the daily timeframe chart, the market show a robust bullish trend, evidenced by just five down days since the October low. There's a consistent pattern of printing higher low values, indicative of a strong upward push.

Read the full Dow Jones Technical Analysis report below.

Dow Jones Technical Analysis

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The Dow Jones Industrial Average (DJIA) is approaching a pivotal point, the July high of 35,680, marking a significant juncture in its weekly trajectory. This approach follows a notable rally, with the market climbing over 9% in just four weeks.

Indicator-oriented Dow Jones technical analysis highlights how the moving averages are currently trending upwards, indicating a positive momentum. Note, however, that Stochastic indicator being in overbought territory could hint at a potential slowdown in the near future.

The nearest key support level on the weekly chart is found at 34,145, while the nearest major resistance is at the July high of 35,680, a level that may prove challenging to breach.

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Daily Dow Jones Technical Analysis

In the daily timeframe chart, the market show a robust bullish trend, evidenced by just five down days since the October low. There's a consistent pattern of printing higher low values, indicative of a strong upward push.

Indicator based Dow Jones technical analysis supports the bullish view. The Short-Term Moving Average (SMA 20) and the Medium-Term Moving Average (SMA 50) are both pointing higher, with SMA 20 trading above SMA 50, reinforcing the bullish sentiment.

In terms of support and resistance, the daily chart shows key support levels at 34,814 and 35,036, while the major resistance mirrors the weekly chart at the July high of 35,680.

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4h Dow Jones technical analysis

The 4h chart shows how DJ has created two lower highs while the support level is fairly close to the market structure area discussed in the daily Dow Jones technical analysis section above. Thus, the market is trading inside a triangle formation.

If it is resolved to the downside the projection revealed by the triangle width (a measure move) points to 34 466. Measured move targets are often the first targets the market moves to after a breakout.

Therefore, if the target is reached and we see further weakness the fact that the market has reached a target is by no means an invitation to go long the market. Always trade what you see in the price action. If the triangle formation is resolved to the upside, look for a move to 35 096. ­­­­

Dow Jones Technical Analysis, 2h

The intraday (2-hour) chart reveals a bullish trend channel, with moving averages also pointing upwards. This reinforces the positive sentiment observed in longer timeframes. The nearest intraday support levels are identified at 35,239 and 35,284, with SMA 50 aligning with the 35,239 support level.

The next key risk events impacting this market

  • USD - S&P/CS Composite-20 HPI
  • USD - CB Consumer Confidence
  • USD - Richmond Manufacturing Index
  • USD - FOMC Member Waller Speaks
  • USD - Prelim GDP
  • USD - Prelim GDP Price Index
  • USD - Core PCE Price Index
  • USD - Unemployment Claims
  • USD - Chicago PMI
  • USD - Pending Home Sales
  • USD - ISM Manufacturing PMI
  • USD - ISM Manufacturing Prices
  • USD - Fed Chair Powell Speaks

Potential Dow Jones Market Moves

Above 35,060 look for a move to July high of 35,680. Alternatively, if the market fails to attract buyers above the 35,060 level, a move down to 34,800 or so.

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How would you trade the Dow Jones today?

I hope this fundamental and technical Dow Jones analysis helps you to make better informed trading decisions. Check the latest market analysis for other instruments and subscribe to receive them in your inbox as soon as they are published

While research has been undertaken to compile the above content, it remains an informational and educational piece only. None of the content provided constitutes any form of investment advice.

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Risk warning: CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 73% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money. Professional clients can lose more than they deposit. All trading involves risk.

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Janne Muta

Janne Muta holds an M.Sc in finance and has over 20 years experience in analysing and trading the financial markets.