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Dow Jones Technical Forecast for the Week Ahead

Dow Jones Technical Forecast for the Week Ahead

Peter Hanks, Strategist

Dow Jones Price Outlook:

  • The Dow Jones remains the weakest of the three major US indices
  • In turn, it trades beneath technical levels that the S&P 500 and Nasdaq have already reclaimed
  • Regardless, a successful hold above nearby trendline support would be an encouraging sign

Dow Jones Technical Forecast for the Week Ahead

The Dow Jones consolidated this week after establishing a notable recovery in the last two weeks. Still, the blue-chip index lags the S&P 500 and Nasdaq 100 as Boeing continues to weigh on the Industrial Average. While the fundamental side of the market remains difficult to pin down, recent price action may suggest investors are willing to accept the index’s current valuation as it consolidates above a nearby trendline from 2009.

Dow Jones Price Chart: Daily Time Frame (March 2018 – April 2020)

dow jones daily price chart

In the week ahead, holding above the trendline around 20,700 will be an important barometer of price action to come. Successive daily closes above the line would suggest bulls are unwilling to surrender the level, while a break beneath may leave the DJI susceptible to another run at the March 19 low near 18,000.

Either way, consolidation is an encouraging sign in my opinion as it suggests traders are waiting for more information and indicates the market has moved away from the panicked state we saw in early March. Still, consecutive daily moves of 2-3% are commonplace - a prospect that would have been preposterous in January.

Dow Jones Price Chart: Weekly Time Frame (2009 – 2020)

dow jones weekly price chart

It is rather unsurprising then to see US equities broadly lower on Friday as traders and investors remain apprehensive about holding risk exposure over the weekend. Recent weeks have seen surprise rate cuts and other reactive policy moves undermine investor confidence in an instant. If, however, the Dow can dodge a catastrophic open on Monday, bulls may look to probe resistance overhead around the December 2018 low and secondarily at 22,600 where price recently stalled.

--Written by Peter Hanks, Junior Analyst for DailyFX.com

Contact and follow Peter on Twitter @PeterHanksFX

DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.

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