Dow Jones forecast: Bulls eye DJIA 40K as tech takes a breather

The US stock markets were trading mixed today. The Dow was up more than 1% at the time of writing, boosted by IBM and JPMorgan shares. On the flipside, this year’s best performing index, the Nasdaq 100, had an off day, down about 0.9% as shares in Nvidia fell by 6%, down for the third consecutive day. Nvidia’s drop is likely to have been driven by technical factors, after its massive gains in recent months came to a halt on Thursday of last week with the stock printing a big bearish engulfing candle on its daily chart, pointing to at least a temporary top. But it looks like the Dow has picked up the slack, thanks in part to continued rise in oil prices. Still, it remains to be seen whether the index will be able to hold onto its gains given a quieter macro calendar this week until Friday's core PCE data. That said, the technical Dow Jones forecast remains bullish for now.

Dow Jones forecast: technical analysis and levels to watch

Source: TradingView.com

The trend is clearly bullish on the Dow Jones and we will favour dip-buying opportunities until the charts tell us otherwise.

At the time of writing the index was testing a potential resistance level around 39565, a level which was support until the breakdown on May 23. Above this area, the next potential hurdle is seen at 40,000, where the index has so far struggled to take out meaningfully. The all-time high comes in at 40,082.

In terms of support, 39150 is the most important short-term level to watch. Previously resistance, this level needs to hold now on any short-term dips to keep the bullish trend and momentum alive. That said, the line in the sand for me is at 38,282 – this being the most recent low made in mid-June prior to the breakout.

-- Written by Fawad Razaqzada, Market Analyst

Follow Fawad on Twitter @Trader_F_R

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