Bottom line: Dow Jones long term trend continues to remain bearish against 29600 mark. The indice has managed to carve yet another lower top around 28300/400 mark yesterday. Bears might remain poised to turn lower towards 18200 levels over the next several weeks.

 Fundamental Outlook:

Dow Jones had managed to push higher through 28355 mark yesterday, before reversing sharply lower. The indice managed to close around 27654, down by -1.59% as risk assets sold off sharply. SPX500 and NASDAQ were down by -1.72% and -2.30% respectively. US Dollar Index closed higher by +0.43%, closing at 93.85 as most risk related currencies lost ground.

Technical Analysis:

Dow Jones reversed sharply from 28355 intraday highs yesterday and managed to close around 27650, down more than 600 points yesterday. The indice has produced an engulfing bearish candlestick pattern on the daily chart, indicating a potential reversal.

Dow Jones had dropped between 29600 and 18200 levels carving an impulse wave in March 2020. The subsequent rally towards 29200 seems to be corrective, which had turned lower since September 03. 2020. The indice might have successfully carved a lower high around 29200 mark.

Also note that Dow Jones had broken below its support trend line recently, entering into the sell zone. The indices managed to push higher through 28300/400 zone yesterday, which is also close to fibonacci 0.618 retracement of the entire drop between 29200 and 26530 levels respectively.

As it would have been expected, bears seem to have taken control and Dow Jones might be producing lower lows and lower highs from here. Most traders might be preparing to initiate fresh short positions around 27900/28000 resistance zone with protective stops above 29600 and projected targets below 25000, 23000 and 18200 levels respectively.

Prepared by

Harsh Japee, Technical Analyst.

Dow Jones Chart

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