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Dow Jones, S&P 500 Outlook: Indices Retake Key Technical Support

Dow Jones, S&P 500 Outlook: Indices Retake Key Technical Support

2019-06-04 21:00:00
Peter Hanks, Analyst
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Dow Jones, S&P 500 Outlook:

Dow Jones, S&P 500 Outlook: Indices Retake Key Technical Support

The Dow Jones and S&P 500 looked to undo losses posted in Monday’s session as they boasted their largest intraday rallies since January. A series of comments from Federal Reserve Chairman Jerome Powell early in the session boosted optimism regarding potential rate cuts which contributed meaningfully to the recovery. While some traders look for a continuation rally heading into Wednesday, both indices are precariously near support – exacerbating vulnerability to opening gaps like the Index faced in May.

Dow Jones Price Chart: Daily Time Frame (February – June 2019) (Chart 1)

dow jones price chart technical levels

The Dow Jones recaptured 25,225, posting its largest intraday rally since January 4. The area has influenced price in the past – posing as the neckline in a recent head-and-shoulders pattern. Still, the Industrial Average will need to distance itself before the level can hope to inhibit another concerted move lower. An initial open above 25,225 is the first step traders should look for if a bullish continuation is to occur.

If accomplished, the Index can look to retake the 200-day moving average to the topside around 25,400. If optimism continues, it will also have to negotiate a descending trendline from May, outlined in the weekly technical forecast. If pessimism returns, immediate support will reside at 24,943 and 24,797. If selling occurs in earnest, secondary support exists at 24,325 and 24,120

S&P 500 Price Outlook

The S&P 500 convincingly drove through its 200-day moving average, closing just north of the widely-watched 2,800 level. Unlike the Dow Jones, the S&P 500 could enjoy greater buoyancy from reclaimed support, but again, mind the gaps. Either way, the Index will now look to hold the 2,800 level and surpass the descending trendline from May and confluent Fibonacci support from 2,811 to 2,815 if it is to continue higher.

S&P 500 Price Chart: Daily Time Frame (February 2019 – June 2019) (Chart 2)

S&P 500 price chart outlook technical levels

To the downside, the 200-day moving average should look to buoy price before the S&P 500 can retest a confluence of Fib levels around 2,722 to 2,715 – an area which has held since mid-March. That said, Wednesday’s opening price action will be pivotal for the Index.

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Should it gap above resistance – an extended short squeeze could develop while simultaneously creating risky unfilled space underneath the confluence of technical levels. At the time of this article’s publication, S&P 500 futures have timidly extended their climb to 2,805. As price action unfolds, follow @PeterHanksFX on Twitter for updates.

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

Contact and follow Peter on Twitter @PeterHanksFX

Read more: Dow Jones, S&P 500, DAX 30, FTSE 100 Weekly Technical Forecast

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