Dow Jones Technical Analysis: Index is Back Down – DailyForex.com

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The stock market ended strongly lower on Tuesday, as the Federal Open Market Committee began its two-day meeting on interest rates.

  • The Dow Jones Industrial Average returned to decline in its recent trading at the intraday levels.
  • The index recorded losses in its last sessions, by -1.01%, falling by 313.45 points, settling at the end of trading at the level of 30,706.24.
  • Rising by 0.64% in Monday’s trading.
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The stock market ended strongly lower on Tuesday, as the Federal Open Market Committee began its two-day meeting on interest rates.

The probability of a rate increase of 75 basis points at the end of the two-day FOMC meeting is 84%, compared to 81% on Monday. The market does not rule out the possibility of a rise of 100 basis points and assigns it a probability of 16%.

After the conclusion of Wednesday’s FOMC meeting and the expected 0.75% increase in the federal funds rate target, all eyes will be on the Fed’s statement and summary of economic outlook. The Fed Chairman Jerome Powell can discuss the Fed’s view on the impact of High interest rates on the US economy.

Interest rate increases are likely to slow after this week with a 50-basis point rise in November, followed by 25 basis points in December.

Meanwhile the two-year Treasury yield hit the 4% threshold, the two-year yield partially rose to 3.95%, previously hitting its highest level since 2007. The 10-year yield rose to 3.56%.

Housing starts unexpectedly jumped 12.2% m/m to an annual rate of 1.575 million units in August, beating market expectations of 1.445 million. However, building permits fell 10% to an annual rate of 1.517 million versus 1.61 million a year ago.

Dow Jones Technical Analysis

Technically, the index settles below the main 31,000 support level, which increases negative pressures on it. Especially amid its trading along a short-term bearish corrective slope line, as shown in the attached chart for a period (daily). In addition, with the negative pressure continuing for its trading below the simple moving average for a period, we notice the continuation of negative signals on the RSI indicators.

Therefore, we expect more decline for the index during its upcoming trading. Especially throughout its stability below the 31,000 level, to target the pivotal 29,653.30 support level.

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