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Dow Jones Technical Analysis: About to Break Major Trendline – 27 April 2022

Our expectations suggest that the index will continue to decline during its upcoming trading.

The Dow Jones Industrial Average returned to decline during its recent trading at the intraday levels, to suffer sharp losses in its last sessions by -2.38%. The index lost by -809.28 points to settle at the end of trading at the level of 33,240.19, after its decline in Friday’s trading by 0.70% .

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All 30 components of the index declined without one exception, and the stock that fell the most in percentage terms was Nike Inc. Cl B rose -5.80%, followed by Boeing Co. by -0.04%, followed by Visa Inc. Cl A at -4.22%.

The main readings for Tuesday’s busy spreadsheet were a small drop in consumer confidence in April, higher home prices, and a slowdown in new home sales. New home sales in the United States fell to 763,000 homes at an annual rate in March from 835,000 homes in February. While the Conference Board’s measure of consumer confidence fell to 107.3 in April from 107.6 in March, less than the 108.2 expected in a Bloomberg poll.

Although first-quarter corporate earnings reports were above expectations, this may not be the best representation of what to expect in the future. The Federal Reserve is raising interest rates to stave off high inflation and other threats to global economic growth such as the war between Russia and Ukraine and rising commodity prices remain.

Technically, the index continues to decline amid the dominance of the corrective bearish trend in the short term, with the continuation of negative pressure for its trading below the simple moving average for the previous 50 days. This is in addition to the influx of negative signals on the relative strength indicators, as shown in the attached chart for a daily period, bringing the index down. The latter is based on a major bullish trend line over the medium term.

Therefore, our expectations suggest that the index will continue to decline during its upcoming trading, especially if it breaks the support level 33,271.90, to target immediately after that the first support levels at 32,071.40.

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