Dow Jones Forecast: 39000 Barrier on Hold, Rebound or Drop?

Dow Jones Forecast: the 39000 support is closely monitored for a potential breakout
Durable goods orders positively beat expectations, possibly favoring inflation levels
FOMC Member Waller Speech is next today after hawkish FOMC Minutes

The market sentiment is torn between rate cut hopes and hawkish Fed outlooks, weighing heavily on key indices. The latest durable and core durable goods orders positively surpassed expectations, FOMC minutes leaned towards a hawkish stand, and the Fed’s favored inflation metric is on the horizon next week to crucially to piece up the inflation and monetary policy state puzzle.

Further rate sentiment volatility is expected later today with the FOMC member Waller’s upcoming speech. With uncertainties all around, technical levels can potentially define prices in a simpler manner:

Dow Jones Forecast: 5H Time Frame – Logarithmic Scale

Yesterday’s drop was contained at a trendline parallel to that connecting the highs of April and May, reaching a low of 39052. From an Elliott wave perspective, a break below the 39000 barrier can potentially hold a strong support at the first wave high, near 38600. Conversely, if bullish sentiment sustains the 39000 level at the weekly close, a rebound can potentially be traced towards 39600 and 39900. This area represents the mid-channel zone and coincides with a 0.618 retracement of the drop from the 40000 high.

Dow Jones Forecast: iShares Dow ETF – 5H Time Frame – Logarithmic Scale

Yesterday's decline in the Dow's ETF saw a gap down towards the April highs, finding potential support at a mid-channel area and previously respected resistance. This parallel channel, though still forming, connects the trend highs and could determine the next levels for both the ETF and the index. Currently, the market lies in a state of uncertainty, with the relative strength index hovering around the neutral 50 level reflecting a balance between bullish hope and significant risk. Breakouts are awaited beyond the mid-channel area to likely guide the ETF's upcoming movements.

From time to time, StoneX Financial Pty Ltd (“we”, “our”) website may contain links to other sites and/or resources provided by third parties. These links and/or resources are provided for your information only and we have no control over the contents of those materials, and in no way endorse their content. Any analysis, opinion, commentary or research-based material on our website is for information and educational purposes only and is not, in any circumstances, intended to be an offer, recommendation or solicitation to buy or sell. You should always seek independent advice as to your suitability to speculate in any related markets and your ability to assume the associated risks, if you are at all unsure. No representation or warranty is made, express or implied, that the materials on our website are complete or accurate. We are not under any obligation to update any such material.

As such, we (and/or our associated companies) will not be responsible or liable for any loss or damage incurred by you or any third party arising out of, or in connection with, any use of the information on our website (other than with regards to any duty or liability that we are unable to limit or exclude by law or under the applicable regulatory system) and any such liability is hereby expressly disclaimed.

City Index is a trading name of StoneX Financial Pty Ltd.

The material provided herein is general in nature and does not take into account your objectives, financial situation or needs.

While every care has been taken in preparing this material, we do not provide any representation or warranty (express or implied) with respect to its completeness or accuracy. This is not an invitation or an offer to invest nor is it a recommendation to buy or sell investments.

StoneX recommends you to seek independent financial and legal advice before making any financial investment decision. Trading CFDs and FX on margin carries a higher level of risk, and may not be suitable for all investors. The possibility exists that you could lose more than your initial investment further CFD investors do not own or have any rights to the underlying assets.

It is important you consider our Financial Services Guide and Product Disclosure Statement (PDS) available at www.cityindex.com/en-au/terms-and-policies/, before deciding to acquire or hold our products. As a part of our market risk management, we may take the opposite side of your trade. Our Target Market Determination (TMD) is also available at www.cityindex.com/en-au/terms-and-policies/.

StoneX Financial Pty Ltd, Suite 28.01, 264 George Street, Sydney, NSW 2000 (ACN 141 774 727, AFSL 345646) is the CFD issuer and our products are traded off exchange.