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The Index Consolidates its Gai


Technically, the index regained its activity after relying on the support of its simple moving average for the previous 50-day period.

The Dow Jones Industrial Average advanced in its recent trading on the intraday levels, to achieve gains for the second day in a row, going up by 0.02%. The index gained about 6.92 points, to settle at the end of trading at the level of 34,092.97, after rising during Tuesday’s trading by 1.09. %.

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The index initially fell in early trading after the Federal Reserve raised the target range for the federal funds rate by 25 basis points, as widely expected, to 4.5%-4.75% at today’s meeting. This raised borrowing costs to their highest levels since 2007.

But stocks quickly bounced back from session lows to turn early losses into gains after the Federal Reserve chairman’s remarks, which came at a press conference following the rate decision. Policymakers had more “work to do” and warned against complacency in the fight against inflation. However, traders welcomed the Fed chief’s assessment that financial conditions had “tightened significantly over the past year” and his observation that “the process of deflation has begun”, with such comments being interpreted as signs of progress in efforts to curb inflationary pressures.

In US economic data on Wednesday, the Institute for Supply Management (ISM) said its manufacturing sector activity index for January fell to 47.4% from 48.4% the previous month, a reading below 50% indicating a contraction in the manufacturing sector.

Employment opportunities in the United States increased to 11 million in December from 10.4 million. The number of American workers who let go in December fell to 4.09 million, from 4.1 million in the previous month.

The private sector added about 106,000 jobs in January, ADP said. That’s a significant drop from the 253,000 jobs added in December. Economists had expected an increase of 190,000 jobs.

Dow Jones Technical Analysis

  • Technically, the index regained its activity after relying on the support of its simple moving average for the previous 50-day period.
  • It gave it a positive momentum that helped it rebound upwards, considering the dominance of the bullish corrective trend in the short term along a slope line, as shown in the attached chart for a (daily) period.
  • Positive signs appeared on the relative strength indicators, to attack the stubborn 34,281.36 resistance level with this rise.

Therefore, our expectations indicate more rise for the index during its upcoming trading, especially if it breaches the 34,281.36 resistance, to then target the 35,361.36 resistance level.

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