Key Takeaways
- The Dow Jones Industrial Average enters buying and selling Wednesday on a nine-day shedding streak, the longest stretch of consecutive each day declines for the blue chip index since 1978.
- The index has continued to pattern decrease after operating into resistance close to the highest trendline of an ascending channel earlier this month, elevating the potential of a possible breakdown.
- Buyers ought to watch main help ranges on the Dow's chart round 43,300, 41,600, and 40,000, whereas additionally monitoring a key overhead space close to 45,000.
The Dow Jones Industrial Average (DJI) enters buying and selling Wednesday on a nine-day shedding streak, the longest stretch of consecutive each day declines for the blue chip index since 1978.
The droop, which equates to almost 1,600 factors, comes after the index closed above the carefully watched 45,000 degree for the primary time on Dec. 4 following an prolonged post-election rally fueled by expectations of a market-friendly White Home and Congress.
Regardless of the latest shedding streak, the index continues to be up 15% in 2024. Nevertheless, that return considerably underperforms the S&P 500’s 27% acquire and the Nasdaq Composite’s 34% leap over the identical interval as a result of Dow’s smaller publicity to mega cap tech firms.
Beneath, let’s break down the technicals on the Dow’s chart and level out essential chart ranges that traders could also be watching out for.
Ascending Channel in Focus
The Dow has tracked greater inside an orderly ascending channel since late July, with the index tagging the sample’s higher and decrease trendlines a number of instances to ascertain simply identifiable help and resistance areas.
Extra just lately, the index has trended decrease after operating into resistance close to the channel’s prime trendline earlier this month, elevating the potential of a possible breakdown.
Whereas the relative power index (RSI) confirms weakening momentum, it’s price noting that the final time the indicator flashed an analogous studying in late October, the Dow went on to rally 6% over the following seven buying and selling classes.
Let’s take a look at three main ranges on the chart the place the index may encounter help and likewise level out a key overhead space to observe throughout upswings.
Main Assist Levels to Watch
Essentially the most instant degree to observe sits round 43,300. This space, just under the index’s newest shut of 43,450, finds a confluence of help from the ascending channel’s decrease trendline, the upward sloping 50-day shifting common, the October swing excessive and the November swing low.
A decisive breakdown under the ascending channel may see the index fall to the 41,600 degree. Buyers who commerce the index may search for shopping for alternatives close to the outstanding late August peak and early November trough.
An prolonged draw back transfer may see the index revisit the psychological 40,000 degree, a area the place it could seemingly encounter help close to a long-term trendline that hyperlinks numerous swing highs and swing lows on the chart between March and September.
Key Overhead Space to Monitor Throughout Upswings
Throughout upswings, traders ought to carefully monitor the important thing 45,000 degree. The index may run into overhead resistance on this space close to the higher vary of a sequence of candlesticks positioned across the Dow’s all-time excessive (ATH).
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As of the date this text was written, the writer doesn’t personal any of the above securities.
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