Dow Jones Technical Forecast for the Week Ahead

Dow Jones Forecast:

• The Dow Jones will search for support in the week ahead after President Trump eviscerated investor confidence on Friday
• With an uncertain fundamental landscape, technical levels may see increased influence as traders look for entry and exit points amid heightened volatility
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Dow Jones Price Forecast for the Week Ahead

The S&P 500, Dow Jones and Nasdaq 100 were crippled on Friday after a series of Tweets from President Trump rattled investor confidence following a speech from Federal Reserve Chairman Jerome Powell. In the address, Chairman Powell offered little indication that significant rate cuts were on the table, evidently drawing the ire of the President. In response, President Trump alluded to a serious escalation in the US-China trade war. Consequently, the Dow Jones will look to grasp for technical support as investors flee from an uncertain and ever-changing market.

Dow Jones Price Chart: Daily Time Frame (February 2018 – August 2019) (Chart 1)

Given the exuberance of Friday’s move, we should look to a broader timeframe of the Dow Jones Industrial Average to see where the major levels of interest lie. To that end, recent price action has pushed the DJIA away from trendline resistance and the rectangular zone of influence marked by November 2018 highs around 26,285.

Therefore, the next area to wield significant technical merit is around 25,250 where two ascending trendlines meet horizontal support from prior lows marked in March, May and August. Thus, if bearishness continues next week this area will look to play a major role in keeping the Dow Jones afloat. Should the level break down, subsequent support becomes more opaque but bulls could look to make a stand around the psychological 25,000 and June lows around 24,590.

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If fundamental headwinds subside over the weekend, a bullish recovery would look to target the levels near Friday morning price action. These levels include the ascending trendline from December around 26,200 and the band of resistance from prior highs beginning at 26,000. Although, Friday’s break beneath the 200-day moving average may also look to refute a quick recovery – currently floating around 25,860. For more technical analysis and fundamental updates on the major equity markets, follow @PeterHanksFX on Twitter.

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

Contact and follow Peter on Twitter @PeterHanksFX

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