Dow Jones Price Outlook:
Dow Jones Technical Forecast for the Week Ahead
The Dow Jones moved slightly lower this week but remains comfortably above nearby support. With sentiment seemingly in the balance between bulls and bears, the Industrial Average rests between a multitude of resistance overhead and support beneath. As earnings season continues, US indices will likely take their cues from the upcoming reports and the Dow may fluctuate between the levels at hand as a result.
Dow Jones Price Chart: 4 – Hour Time Frame (February 2020 – April 2020)
With that in mind, the DJIA may look to probe the various levels overhead starting at around 23,880 followed by two horizontal trendlines at 24,120 and 24,600 respectively if quarterly findings impress. Together, the levels overhead form a robust area of resistance that will look to keep the Dow in check, potentially allowing the Nasdaq and S&P 500 to extend their lead over the Industrial Average.
Still, market participants have shown price action is a two-way street. If bears overtake bulls in the week ahead, the Dow may find itself testing support at the 38.2% Fibonacci level around 22,537. Since the fundamental side of the market is still highly uncertain, capitalizing on attractive risk and reward set-ups between possible technical levels may be the most appropriate strategy at this stage. That said, the area overhead may act as an area of invalidation if traders look to explore bearish opportunities.
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Conversely, IG Client Sentiment data reveals retail traders are overwhelmingly short the Dow Jones – despite its recovery since late March. Consequently, the indicator offers us a bullish bias that may suggest the Dow will look to probe the resistance outlined above. In the meantime, follow @PeterHanksFX on Twitter for updates and analysis.
–Written by Peter Hanks, Junior Analyst for DailyFX.com
Contact and follow Peter on Twitter @PeterHanksFX