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Dow Jones Talking Points:

- The Federal Reserve has hiked rates for the third time in 2018, and the door remains open for a fourth in December. The bigger item from today was more subjective in nature, as the bank removed the word ‘accommodative’ in reference to monetary policy. The net impact in the Dow has been a slight move lower as the lower-highs from the past week remain.

- The Dow has had an impressively strong Q3, and the idea of some pullback ahead of the end of the quarter makes sense. This does not, however, obviate the bullish stance in the index, and traders can move-forward with eyes focused on support for bullish continuation strategies of a longer-term, bigger-picture nature.

- DailyFX Forecasts on a variety of currencies such as the US Dollar or the Euro are available from the DailyFX Trading Guides page. If you’re looking to improve your trading approach, check out Traits of Successful Traders. And if you’re looking for an introductory primer to the Forex market, check out our New to FX Guide.

Do you want to see how retail traders are currently trading the US Dollar? Check out our IG Client Sentiment Indicator.

Dow Drops After the Fed Hikes, Removes ‘Accommodative’

Today brought the third rate hike out of the Federal Reserve in 2018, and the door was very much kept open for a fourth hike in December. The more noticeable event in today’s rate decision, however, is one of a more subjective nature as the FOMC removed the key word of ‘accommodative’ in reference to monetary policy. Mr. Powell spoke to this in the accompanying press conference, noting that this means nothing to the rate hike path. But – if that’s the case and this change was inconsequential, why remove it at all, as much of the rest of the statement remained the same as we had seen at the July rate decision.

Nonetheless, price action in the Dow Jones Industrial Average posed an initial moved higher that was quickly faded-out. At this point, prices are below pre-release levels, and short-term bearish trend-line from last Friday’s high continues to hold resistance.

Dow Jones Hourly Price Chart: Support Holds Above Yesterday’s Lows After Two-Way FOMC Move

dow jones hourly price chart dow djia dia

Chart prepared by James Stanley

Given the lack of exuberance in near-term price action around today’s FOMC meeting, traders would likely want to revert to longer-term views for forward-looking strategy. As we’ve been following, the Dow has been in the midst of a strong bullish run for the past three months, and we’re nearing the end of what’s been an aggressively bullish quarter.

We came into Q3 looking for a support zone around the 25k psychological level. Now not quite three months later – we have fresh all-time-highs as exuberance has run strong. The idea of some additional pullback as we move towards the Q3 close makes sense, particularly given just how far we’ve run already since the July open.

Dow Jones Daily Price Chart: Fresh All-Time Highs and A Very Bullish Q3 for the Dow

dow jones daily price chart dia djia

Chart prepared by James Stanley

Coming into this week, we looked at two possible areas of support in the Dow, looking for strength to continue as we’d just witnessed an aggressive bullish breakout in the Nikkei. At this stage, neither of those support zones have come into play, and traders may want to wait for a deeper pullback before looking to take on top-side exposure, especially given that we may see some window-dressing in the final days of Q3.

Dow Jones Four-Hour Price Chart: Support Potential Remains

dow jones djia dia four hour price chart

Chart prepared by James Stanley

You may also be interested in:

The Dow Spends a Week at Support: Will Bulls Follow-Through?

Equity Forecast for Dow, S&P 500, DAX, FTSE and Nikkei

Day Trading the Dow Jones: Strategies, Tips & Trading Signals

To read more:

Are you looking for longer-term analysis on the U.S. Dollar? Our DailyFX Forecasts for Q3 have a section for each major currency, and we also offer a plethora of resources on USD-pairs such as EUR/USD, GBP/USD, USD/JPY, AUD/USD. Traders can also stay up with near-term positioning via our IG Client Sentiment Indicator.

Forex Trading Resources

DailyFX offers a plethora of tools, indicators and resources to help traders. For those looking for trading ideas, our IG Client Sentiment shows the positioning of retail traders with actual live trades and positions. Our trading guides bring our DailyFX Quarterly Forecasts and our Top Trading Opportunities; and our real-time news feed has intra-day interactions from the DailyFX team. And if you’re looking for real-time analysis, our DailyFX Webinars offer numerous sessions each week in which you can see how and why we’re looking at what we’re looking at.

If you’re looking for educational information, our New to FX guide is there to help new(er) traders while our Traits of Successful Traders research is built to help sharpen the skill set by focusing on risk and trade management.

--- Written by James Stanley, Strategist for DailyFX.com

Contact and follow James on Twitter: @JStanleyFX