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Dow Jones Hammered From Resistance, Watch Trend Support

Dow Jones Hammered From Resistance, Watch Trend Support

Paul Robinson,
What's on this page

Dow Jones Technical Outlook:

  • Dow sells off from top-side trend-line of long-term pattern
  • Room to go before trend-line support is met

See how the quarterly forecast has played out what it could mean for the big-picture – Q2 Equity Markets Forecast.

Dow sells off from top-side trend-line of long-term pattern

The Dow was treading water prior to the FOMC on Wednesday, but with a 25-bps cut already priced in and Fed language lacking a more accommodative tone the market sold off. Yesterday, the downside was furthered along with more Trump/Trade War headlines.

The Dow coming off where it did isn’t a surprise, though, given the top-side trend-line from the Jan 2018 high both it and the S&P 500 were struggling to overcome. The momentum of the down-move has been strong and favors even more weakness.

Tactically speaking, a smallish bounce/consolidation would be ideal for establishing continuation-style trades, but perhaps momentum will be too strong for that to unfold. The initial target on more weakness is the trend-line rising up from the December low.

It will be an interesting spot to see if buyers can show up, or whether a test of the 200-day is the next objective on the market’s mind. For now, sitting tight until next week where we will get an opportunity to see how the market wants to handle this first bout of selling from record levels (and resistance).

Long-term, we have massive Reverse Symmetrical Triangles (RSTs) (also known as Megaphones) in both the Dow and S&P 500, that if full-on bearish forces come to fruition mean the market will be set up for a volatile remainder of the year. Good news for traders, bad news for investors.

Check out the IG Client Sentiment page to see how retail traders are positioned and what it could potentially mean for various currencies and markets moving forward.

Dow Jones Daily Chart (down-move set to continue)

Dow Jones Daily Chart (down-move set to continue)

Dow Jones Chart by Tradingview

Dow Jones Weekly Chart (RST/Megaphone)

Dow Jones Weekly Chart (RST/Megaphone)

S&P 500 Weekly Chart (RST/Megaphone)

S&P 500 Weekly Chart (RST/Megaphone)

S&P 500 Chart by Tradingview

To learn more about U.S. indices, check out “The Difference between Dow, Nasdaq, and S&P 500: Major Facts & Opportunities.” You can join me every Wednesday at 10 GMT for live analysis on equity indices and commodities, and for the remaining roster of live events, check out the webinar calendar.

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Whether you are a beginning or experienced trader, DailyFX has several resources available to help you; indicator for tracking trader sentiment, quarterly trading forecasts, analytical and educational webinars held daily, trading guides to help you improve trading performance, and one specifically for those who are new to forex.

---Written by Paul Robinson, Market Analyst

You can follow Paul on Twitter at @PaulRobinsonFX

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