News & Analysis at your fingertips.

We use a range of cookies to give you the best possible browsing experience. By continuing to use this website, you agree to our use of cookies.
You can learn more about our cookie policy here, or by following the link at the bottom of any page on our site.

0

Notifications

Notifications below are based on filters which can be adjusted via Economic and Webinar Calendar pages.

Live Webinar

Live Webinar Events

0

Economic Calendar

Economic Calendar Events

0
Free Trading Guides
Subscribe
Please try again
EUR/USD
Bearish
Oil - US Crude
Bullish
Wall Street
Bearish
Gold
Mixed
GBP/USD
Bearish
Low
High
of clients are net long.
of clients are net short.
Long Short

Note: Low and High figures are for the trading day.

Data provided by
USD/JPY
Bullish
Low
High
of clients are net long.
of clients are net short.
Long Short

Note: Low and High figures are for the trading day.

Data provided by
More View more
Real Time News
  • Gold printed a fresh eight-month low earlier in today’s session and the precious metal looks set to fall further if US Treasury yields resume their multi-month rally. Get your $XAUUSD market update from @nickcawley1 here:https://t.co/I4RpWM0mEY https://t.co/OrtbLLncuK
  • $Silver not able to escape this rates move, testing tl support. not quite as bearish looking as $gold https://t.co/XnW51WNiBd
  • Other measures of risk are dropping as well: EEM emerging markets, HYG junk bonds, AUDJPY carry trade, copper for commodities (hey at least it eases that inflation fear a little)
  • There goes 3,800 on $SPX
  • oy that's a nasty candle on the $SPX two hour chart $SPY $ES https://t.co/z95ReMpglC
  • #Gold continues to head lower today, currently near the $1,730 level. The precious metal is trading at its lowest levels since June. $XAU $GLD https://t.co/V2jRiiG7kJ
  • $SPX is at its lows. The bounce has yet to materialize. Better pull together the BTD, Diamond Hands and Laser Eyes to form a Voltron of speculative power
  • The stimulus checks filtered into the last month's US personal income measure with a massive 11% increase. Spending wasn't as dramatic but still impressive up 2% https://t.co/gX7cLwiVqX
  • Commodities Update: As of 15:00, these are your best and worst performers based on the London trading schedule: Gold: -1.82% Oil - US Crude: -1.94% Silver: -3.20% View the performance of all markets via https://www.dailyfx.com/forex-rates#commodities https://t.co/8iK8kRkwIQ
  • Japan Minister of Finance Aso: - Yellen said she had no intention of tightening policy - Global economy faces uncertainty, warrants caution $JPY $USD
Dow Jones Forecast: Will There be Another 10 Percent Price Drop?

Dow Jones Forecast: Will There be Another 10 Percent Price Drop?

Margaret Yang, CFA, Strategist

Dow Jones Index Technical Forecast: Bearish

  • The Dow Jones stock index hit an all-time high of 31,188 before entering into consolidation
  • The index broke an “Ascending Channel” with bearish momentum, pointing to a deeper pullback
  • A 10 percent correction will lead to a test of the 61.8% Fibonacci retracement level at 28,100
Equities Forecast
Equities Forecast
Recommended by Margaret Yang, CFA
Get Your Free Equities Forecast
Get My Guide

The Dow Jones Industrial Average reached its all-time high of 31,188 on January 20th and entered a consolidative periodthereafter. The formation of a long bearish candlestick hints at strong selling pressure as a result of heightened market volatility. The index appeared to be overstretched after surging nearly 20% from early November to the end of January, rendering it vulnerable to a technical pullback when profit-taking kicked in.

The index broke below its 20-Day Simple Moving Average (SMA) and pierced through the lower bound of the “Ascending Channel” formed since early November. This hints at a near-term trend reversal and may open the door for further downside potential with an eye on 30,070 (23.6% Fibonacci retracement) for support.

Drawing a Fibonacci Retracement between the December low of 26,137 and the January peak of 31,188 helps to define potential support levels that price may arrive at in the weeks to come should we see a deeper pullback. The 61.8% Fibonacci retracement level, which is at 28,100, may be closely eyed as potentially strong support.

A shallow technical pullback may end up with a 5% decline while a more meaningful correction could see with a 10% retracement from the peak. The Dow Jones experienced two technical corrections in September and late October, falling 9% and 10% respectively (chart below). Interestingly, if the current correction ends up with a 10% drawdown from the all-time high, it will arrive at 28,100 – the 61.8% Fibonacci retracement.

Near-term momentum appears biased towards the downside, as suggested by MACD divergence. The indicator trended lower while price edged higher, showing depleting upward momentum.

Dow Jones Index – Daily Chart

Dow Jones Daily Chart

On the weekly basis, the Dow Jones index pocketed an astonishing gain of 71% from late March 2020 until the end of January 2021(chart below). The overall trend remains bullish-biased, with recent consolidation potentially paving the way for higher highs. Both the 10- and 20-Week SMA lines are trending higher, suggesting that the medium-term bull trend remains intact.

Price remains well above the middle Bollinger line (20-Week SMA), which may serve as an immediate support level. The MACD indicator is about to form a bearish crossover, underscoring that momentum has likely turned bearish and more volatility is perhaps on the way.

Dow Jones Index – Weekly Chart

Dow Jones Weekly Chart
Building Confidence in Trading
Building Confidence in Trading
Recommended by Margaret Yang, CFA
Don’t give into despair, make a game plan
Get My Guide

--- Written by Margaret Yang, Strategist for DailyFX.com

To contact Margaret, use the Comments section below or @margaretyjy on Twitter

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

DISCLOSURES