Dow Jones Index (INDEXDJX: .DJI) has been rising for the past few weeks as the US stocks price in the upcoming pause in rate hikes. Our last Dow Jones Average forecast has played out exactly as predicted. However, considering the current state of the US markets, a pullback could be around the corner.
On Wednesday, Dow Futures showed a negative price action. During the London session, the futures of the benchmark US Index were changing hands at 33,554 after showing a minor loss for the day. On Tuesday, Dow Jones Index also closed in the red after a 0.62% drop.
Dow Jones Average Slides Amid Falling DXY Index
This week’s drop is quite surprising as the dollar strength index showed weakness. The DXY Index dropped by 1% during the first two days of the week. Generally, weakness in the dollar causes a rally in US stocks, but this was not the case this week. A major reason behind the drop in Dow Jones Index was the soaring oil prices, which triggered recession fears once again.
The recently announced output cuts by OPEC+ have deepened economic concerns. This will decrease the daily production of crude oil by 1.15 million barrels. Furthermore, the Chinese PMI data also showed that the 2nd biggest global economy is still far from fully recovered.
Dow Jones Index Likely To Have a Pullback
The INDEXDJX: .DJI chart shows that Dow Jones Average has been surging for the past 3 weeks. The bounce from the March lows has already resulted in 6.25% gains. This move to the 33,300 level was predicted in our last week’s analysis due to the reclaim of the 32,700 support level. In the coming days, the Dow Jones Index forecast of 34,245 can become a reality. This level is the next major resistance on the daily chart.
However, there is a higher likelihood of a pullback in the Dow Jones Industrial Average from the 33,600-34,245 region. This may result in another retest of the 32,700 level. The index must flip this level into support before targeting further upside.
