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Dow Jones Extends Rally But A Trend Line Break Suggests It Could End Soon

Dow Jones futures
Dow Jones

The Dow Jones continued to crawl higher on Friday despite the lack of reports. The US’ blue-chip stock index closed 23.9 points or 0.08% higher on 28,645.3. Meanwhile, Dow Jones CFDs ended Friday’s trading unchanged when the stock index trickled lower during the New York session. It pared its gains from 28,731.5 and closed at the same price where it opened for the day at 28,608.2.

Gainers and Losers

Gains were led by Nike at 0.85%. In second was Proctor & Gamble at 0.69%. Coca-cola then rounded up the top 3 gainers for Friday’s trading with a 0.60% profit.

On the other hand, Dow Chemical led losses when it finished the day in the red by 0.71%. Home Depot and Exxon Mobil were the second and third biggest losers at -0.38% and -0.34%.

Economic Data Due from the US Today

There were no top-tier data released on Friday which suggests that price action on equities markets on Friday may have been driven by profit-taking. Today, the Chicago PMI for December will be due at 2:45 pm. The forecast is for the December reading to print at 48.2. Then at 3:00 pm, the pending home sales report for November is eyed to show a 1.5% uptick from last year.

Positive figures could help the Dow Jones extend its rally because they would re-affirm the market’s optimism for the US economy. On the other hand, disappointing figures would weigh down the stock index.

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Dow Jones Outlook

On the hourly time frame of Dow Jones CFDs, we can see that the stock index has pulled back some of its gains. When you draw the Fibonacci retracement tool from the low of December 24 to the high of December 27, the Dow Jones seems to have found support at the 50% Fib level. However, with its retracement, the stock index also seems to be trading below support at the rising trend line (from connecting the lows of December 3, December 4, December 9, December 12, December 18, and December 24).

This break below the rising trend line could mean that the next near-term support for the Dow Jones stock index will be at the 61.8% Fib level around 28,586.9. This price is also a previous resistance level. It also seems to coincide with the 100 SMA. If support at that price does not hold, the Dow Jones could trade lower to re-test its previous low on December 24 at 28,496.3.

On the other hand, if there are enough bids around 28,600.0, we could see the Dow Jones rally to new historic highs beyond 28,731.5.