Dow Jones S&P 500

Dow Jones Corrects from the Highs, Eyes Support at 31,800

The Dow Jones index made all-time highs last week as the world focused on the message from the Fed. As it turned out, the Fed remains accommodative despite rising yields and ongoing economic recovery, thus fueling a further rally in the stock market. However, right after the Fed’s decision, the Dow corrected and now has no support all the way to 31,800.

The week ahead is full of important events out of the United States that will move financial markets. Every day, there is at least one Fed member holding a speech in a move designed to strengthen the Fed’s forward guidance.

Moreover, on Tuesday and Wednesday, the Fed’s Chair, together with the U.S. Treasury Secretary, are due to testify on the CARES report. As always, when the Fed Chair speaks, the markets listen, and this time it will be even more interesting because Janet Yellen is also testifying.

Dow Jones Technical Analysis

The technical perspective on the Dow Jones suggests a possible move lower to the main support level is in the cards. However, bears should be aware of both dynamic and horizontal support at the 31,400 area, where traders will likely try to buy the dip.

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As such, bears may want to remain on the short side with a stop at the highs and targeting the 31.500 area.

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