Dow Jones Technical Analysis: Bearish Corrective Price – 23 March 2022
We expect more rise for the index during its upcoming trading.
The Dow Jones Industrial Average rose during its recent trading at the intraday levels, to achieve gains in its last sessions, by 0.74%, to add about 254.47 points to the index. It settled at the end of trading at the level of 34,807.47, after its decline in Monday’s trading by -0.58%.
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24 of the index’s 30 components rose by percentage, with Boeing Co. by 2.76%. It is worth noting that this stock was at the forefront of the shares listed in the lower index yesterday after a Boeing 737 passenger plane of China Eastern Airlines with 132 people on board collided in the mountains of southern China.
Nike Inc. stock also advanced. Cl B rose 2.23% after the company reported stronger-than-expected earnings and sales on Monday.
Investors focused on monetary policy in the wake of Powell’s hawkish remarks in a speech Monday to the National Association of Business Economics, and comments by Policy Committee member Pollard in an interview with Bloomberg TV Tuesday morning about his view that the central bank needs to “move aggressively to keep inflation in check.”
“Inflation is too high,” San Francisco Fed President Mary Daly said on Tuesday during a hypothetical talk sponsored by the Hamilton Project. She said the Fed needs to steadily raise interest rates to a neutral level and consider tightening monetary policy “a little bit” more to constrain economic growth until inflation returns to low.
Technically, the stock benefited from the positive support of the simple moving average for the previous 50 days, to return to the rise in its last sessions. It succeeded with this rise in surpassing the ceiling of that descending corrective price channel that was limiting the index’s recent trading in the short term, as shown in the attached chart for a (daily) time period. We notice the emergence of a negative crossover with the relative strength indicators, after they reached the areas of oversaturation with purchases, and in an exaggerated way compared to the movement of the index. This may curb the upcoming gains of the index due to its need to dispose of some of its overbought.
Therefore, we expect more rise for the index during its upcoming trading, to target the first resistance levels at 35,631.19, as long as the main support level 34,000 remains intact.