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Dow Jones Technical Analysis: The Indicator Turns Green – 13 December 2022

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Expected inflation over the next year fell to 5.2% last month from 5.9% in October, while the three-year forecast eased to 3% from 3.1%.

The Dow Jones Industrial Average jumped during its recent trading on the intraday levels, to achieve sharp gains in its last sessions by 1.58%.The index earned about 528.57 points, to settle at the end of trading at the level of 34,005.0.This happened after the index decreased in last Friday’s trading by -0.90. %, to end the week with a decrease of -2.77%.


According to a New York Fed survey released on Monday, US inflation expectations eased in November, while expectations for household income growth reached a record high.

Expected inflation over the next year fell to 5.2% last month from 5.9% in October, while the three-year forecast eased to 3% from 3.1%. After five years, inflation estimates have fallen by 0.1 percentage point to 2.3%, according to the survey, which is based on a survey of nearly 1,300 households.

The central bank has been tightening monetary policy since March in an effort to tame inflation. For October, consumer inflation rose 0.4%, unchanged from the previous month, while the annual increase of 7.7% was the smallest since January, according to government data released last month. November CPI data is due on Tuesday, the day the next two-day meeting of the Federal Open Market Committee begins.

Markets are currently pricing in a roughly 75% chance that the Fed will slow its next rate hike to 50bps, with a 25% chance of another 75bp hike.

Technically, we notice the beginning of a positive divergence formation in the relative strength indicators, after reaching areas that are highly saturated with selling operations. This was exaggerated compared to the movement of the index, with the start of positive signals from them, considering its impact on the breach of a bearish corrective slope line earlier in the short term, with continued pressure. Positive trading above the simple moving average for the previous 50 days.

Therefore, our expectations indicate more rise for the index during its upcoming trading, as long as the 33,248.60 support remains stable, especially if it breaches the important and stubborn 34,281.36 resistance, to then target the first resistance levels at 35,372.30.

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