Bottom line: Dow Jones long term bearish structure remains intact until prices stay below 29600 mark. The counter trend rally that had begun since 18200 levels could be mature as the indice reverses from 27636 levels yesterday. A break below 27049 confirms bearish reversal.

Fundamental Outlook:

Dow Jones closed at 27138 levels, lower by -1%, after having rallied for 7 consecutive days. SPX500 was down more than -0.50% while DAX closed lower by -2.3%. It is too early to confirm, but this could potentially be a turning point for risk sentiment and Global Indices. Today’s most awaited event is the Fed meeting around 02:00 PM EST.

Bitcoin had rallied towards 10500 mark last week before pulling back. The crypto might be facing a potential sell off, as the US Dollar set to regain some of its lost ground. Furthermore, if risk sentiments continue to decline, Bitcoin may follow suit.

AUDUSD managed to hit 0.7042 yesterday, the highest peak since January 01, 2020, before pulling back sharply lower. The risk sentiment related Aussie Dollar managed to close at 0.6954, down close to -0.90%. It may come under further pressure as Global Indices face a potential selloff going forward.

Technical Analysis:

Dow Jones might have carved a meaningful top around 27636 levels yesterday. The indice had dropped to 27138 levels during the day before pulling back higher again. It is seen to be trading close to 27400 levels (futures) as we publish this article, and is expected to drop further below 27000 going forward.

Dow Jones had dropped from 29600 through 18200 levels as an impulse wave. The rally from 18200 through 27636 is corrective in nature A-B-C. Ideally, the indice should produce another impulse wave lower towards 18200 levels. Yesterday’s bearish candle formation is a potential Engulfing Bearish on the daily chart. We need to see a follow through and break below 27000 to confirm.

Most traders might be willing to initiate fresh short positions around 27000/27400 levels, with protective stops above 29600 and projected targets below 18200, going forward.

Prepared by

Harsh Japee, Technical Analyst.

Dow Jones Chart

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