Dow Jones Struggles Beneath 50DMA Resistance: Are Bears Taking Control?

The Dow Jones Industrial Average finds itself ensnared below a critical threshold and wrestling to regain its footing Monday.

Having breached the support of its 50-day moving average during Thursday’s session, the blue-chip index, as closely tracked by the SPDR Dow Jones Industrial Average ETF DIA, has since navigated through a pair of lackluster sessions, with daily fluctuations of a modest 1% range, culminating in near-flat closes.

Bullish Hopes Falter As Technical Levels Flounder

The following one-day chart illustrates the Dow Jones Industrial Average’s 50-day Moving Average, RSI and MACD.

The significance of the 50-day moving average cannot be understated for the Dow. This average has served as a robust bullish support, and this was especially evident during three instances between June and July this year.

The bullish streak from July 10 to 26, when the Dow marked 13 consecutive days of gains, now seems like a distant memory. Since the peak on Aug. 1, the index has retreated by 3.4%.

Signs of shifting market dynamics become apparent when analyzing traditional momentum indicators. Both the 14-day Relative Strength Index (RSI) and the Moving Average Convergence Divergence (MACD) now signal a potential trend reversal.

The RSI has dipped notably below the 50 mark, mirroring the lows observed in late May 2023 and indicating a bearish trajectory. The MACD has ventured below the zero line for the first time since June 2023, underscoring the transition of short-term momentum into the hands of the bears.

Potential Support Levels To Watch

Using Fibonacci retracement levels tracing the span between 2023’s highs and lows, the immediate focal point stands at 34,050, marking the 38.2% retracement.

Descending further down the scale, a more substantial pillar of support rests at 33,550, representing the 50% retracement level. A breach of this level could embolden the bearish camp, potentially paving the way for a challenge on the 33,050 level, coinciding with the 61.8% retracement.

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