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Dow Jones Technical Analysis: Settles with Bearish Range – 15 March 2022

Our expectations indicate a return to the index’s decline during its upcoming trading.

The Dow Jones Industrial Average stabilized during its recent trading at the intraday levels. The index achieved negligible gains, as it added about 1.05 points only, to settle at the end of trading at the level of 32,945.25, after its decline in Friday’s trading by -0.69%.

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The drop in oil prices has helped stocks hold for some time, but the market remains vulnerable to selloffs like the one seen on Monday afternoon, as macroeconomic uncertainty remains high. There may be talk from Russia and Ukraine about continuing negotiations between them, but there is no concrete evidence so far with the continued Russian attacks in Ukraine.

In addition to that, the Federal Reserve will announce its interest rate decision this week. Markets expect the Fed to raise its benchmark lending rate by a quarter of a percentage point, for the first time since 2018 on Wednesday in response to rising inflation.

The focus will be on whether the central bank will signal a more aggressive course to raise interest rates in the future, a bold Fed could mean slower economic growth.

Financial markets are now pricing in a 25 basis point rate increase at this week’s meeting, and a 50 basis point hike at either the May or June meeting.

Technically, the index is moving within a descending corrective price channel that limits its previous trading in the short term, as shown in the attached chart for a (daily) period, with the negative pressure continuing for its trading below the simple moving average for the previous 50 days.

The influx of positive signals on the relative strength indicators is what supported the index in its recent trading. We notice that it reached areas of overbought operations, so this support may not last for long.

Therefore, our expectations indicate a return to the index’s decline during its upcoming trading, especially throughout its stability below the level of 33,271.93, to target the important support level 32,071.40.

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