Dow Jones Index (INDEXDJX: .DJI) is gaining strength after tagging new YTD lows earlier this month. The recovery in the US benchmark index is due to an ease in the banking concerns that led to a major sell-off in bank stocks. As the bank shares crawl back up after a steep fall, Dow Jones Industrial Average is also gaining strength once again.
After a bullish start of the year, Dow Jones Index is trading 4.74% below its YTS high. On Wednesday, the index tracking 30 top companies in the US gained 323 points and was up 1%. The index also broke above the 200-day moving average and closed slightly above its 32,700 points resistance.
Banks shares showed a positive price action this week, which was also reflected in the Dow Futures. Another factor contributing to the bounce was a rebound in major tech stocks like Intel, Apple, and Microsoft. Tech companies and banks are the major constituents of the Dow Jone Index.
Another factor that the markets are pricing in is the expected pause in rate hikes. According to most analysts, the era of rate hikes is finally over due to the recent bank failures in the US. However, the interest rates are likely to remain high for the rest of the year as inflation remains elevated.
Technical analysis of INDEXDJX: .DJI reveals key levels that the price has respected in the past. It is also quite clear from the following chart that there is resistance at 32,700 points level. This is a classic example of previous support now acting as resistance. Another rejection from this level can send the price below 32,000 once again.
However, a reclaim of the 32,700 level will push the price towards the 200 moving average that currently lies at 33,309 on the daily chart. This will be a key retest for the Dow Jone Index forecast as a breakout may send the price to new yearly highs.
This post was last modified on %s = human-readable time difference 12:05