Dow Jones Technical Analysis: Index is Looking for a Bottom – 12 December 2022

The Dow Jones Industrial Average fell during its recent trading on the intraday levels, to record losses in its last session by -0.90%, to lose about -305.02 points, settling at the end of trading at the level of 33,476.46.This happened after the index witnessed gains in Thursday’s session by an amount of 0.55%.Over the past week, the index fell by -2.77%, breaking a series of weekly gains that lasted for two consecutive weeks, deepening the current month’s losses to -3.21%.

Annual producer price growth slowed for the fifth month in a row, adding to signs that inflation pressures were moderating ahead of a possible downward turn in the Fed’s tightening campaign next week.

The producer price index rose 7.4% in November, down from October’s advance of 8.1%, the Bureau of Labor Statistics reported Friday. The Wall Street consensus was for a gain of 7.2%, as November’s increase was the slowest since May of 2021.

Meanwhile, US consumer confidence rose unexpectedly so far in December as inflation expectations for next year improved, according to preliminary data released on Friday by the University of Michigan Consumer Surveys.

The Consumer Confidence Index read at 59.1 this month, up from 4% from 56.8 in November, while consumer inflation expectations over the next year fell to 4.6% from 4.9% last month.

Technically, the index is trying, in its recent trading, to search for a bullish bottom from which to base it that may help it gain the necessary positive momentum to restore its recovery and rise again. This happened considering its impact on its earlier breach of a bearish corrective slope line in the short term, as shown in the attached chart for a period (daily).

The positive pressure of its trading continued above its simple moving average for the previous 50-day period, as we notice during that a positive intersection with the relative strength indicators, after reaching areas that are highly saturated with selling operations. This was exaggerated compared to the movement of the index, which suggests the start of a positive divergence in it.

Therefore, our expectations suggest that the index will rise again during its upcoming trading, especially as long as it is stable above the support level of 33,248.60, to target once again the stubborn resistance level of 34,281.36, in preparation to attack it.

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