Dow Jones Faces Critical Test Amidst Hawkish Fed Stance
21 September 2023
The focus of today's technical analysis is firmly on the Dow Jones Industrial Average (often colloquially referred to as 'dojos'). The reason? We're on the precipice of what might be a significant sell signal, if not already in the midst of it.
In the backdrop of the recent hawkish stance from the Federal Reserve, the stock market indices faced a tumultuous session, with significant sell-offs in evidence. The Dow Jones was no exception and suffered heavily. What's concerning for traders and investors alike is that the Dow's fall took it decisively below two critical levels: the horizontal support set at 34,500 points, depicted in yellow, and a long-standing uptrend line illustrated in green. The breakdown into the blue rectangle, the zone of bearishness, is currently being read as a solid invitation to sell by many market participants.
However, the market's inherent unpredictability implies that there is always room for surprises. Today, bulls might muster the strength to drive prices northwards, possibly sculpting a reversal formation. Nevertheless, should the Dow Jones end the day within the boundaries of the blue rectangle, or even below it, it will likely be interpreted by the trading community as a clear long-term sell cue.