Dow Jones Index (INDEXDJX: DJI) has failed another rejection from a key resistance level, as I feared in my previous forecast. Things are not looking good for the benchmark index tracking some of the most well-established companies in the US.
After a pullback last week, Dow Jones Industrial Average closed the first trading session of the week with a 0.62% gain. This makes the first green day for the index after three consecutive days of downtrend. The technical analysis reveals that time is running out for the bulls.
The recently released minutes from the June FOMC meeting have revealed that most of the members are in favor of further rate hikes. While last month’s meeting ended with a pause in rate hikes, many analysts are still expecting at least another two rate hikes this year.
This situation is very tough on the liquidity conditions of the stock markets. Currently, the markets are pricing in another 25 bps rate hike after this month’s FOMC meeting on 25-26 July. The upcoming release of the June CPI report on July 12 will play a vital role in this regard.
A look at the following Dow futures chart reveals the rejection from the 34,200 level. I talked about this scenario in my last forecast for the benchmark index. Currently, the index is retesting the upwards trendline. A break below this trendline will add to the bearish confluence and may trigger a major pullback.
Such a breakdown will make Dow Jones Index forecast extremely bearish, and the bears may target the 32,600 level in the short term. This level comes due to the confluence of May lows and the Fib golden pocket. The index can only escape this fate by breaking above the 34,200 level as soon as possible.
I’ll keep posting my updated DJI analysis and my personal trade setups on Twitter, where you are welcome to follow me.
This post was last modified on Jul 11, 2023, 11:05 BST 11:05