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Is DOW JONES losing its strength? What can this mean for indices in general?

The Dow Jones is one of the key indices of the world economy. Together with the SP 500 or NASDAQ, it is one of the most important indices also in the trading world. However, the last week does not look very good for this index. Because compared to the rest of the market, DOW JONES is starting to lose ground.

The current market situation

The current situation in the markets is still very good. At the beginning of September, the Fed (American Central Bank) had an online conference that had a bullish impact on all markets. Likewise, the results of inflation from the USA are still positive and did not grow any further. Despite the announced reduction of incentives, no shock has arrived on the market yet. In my opinion, however, it is only a matter of time before its arrival. As the first index of this trio, the Dow Jones index is starting to lag behind. Let’s take a closer look at the chart.

What is happening on the Dow Jones?

We can clearly see the rising wedge on the chart. Similar price formation can be seen also on SP 500 and NASDAQ charts. Everything would be fine if it was not for the Dow Jones dropping out of that wedge. The lower trend is clearly breached and we have been under it for several days. We even got under EMA21, which is very respected in the world of indices. What is important now is how we will close this week.

It is the first sign of weakness after a long time of movement in the rising wedge. So far, however, it can be seen exclusively on this index and nowhere else. Yet no major dump or panic has arrived. Be that as it may, the market is already starting to give us signs that something is clearly wrong. If something similar were to happen on SP 500 or NASDAQ it could mean the beginning of something bigger.

So far, however, it is only a small ripple on the otherwise calm surface that needs to be watched never the less. What is crucial now is whether the Dow Jones can get above the EMA21 or above the trend line again in the days to come. The value of 33,705 points will be also important. We should maintain this level so that the chart does not create a lower LOW. Violation of this level would already mark the beginning of the correction.

dow jones technical analysis Figure 1: The current situation on Dow Jones index

Jakub is a crypto trader and founder of Trader 2.0 project, which helps hundreds of traders from central Europe to understand cryptocurrency trading and its challenges. Jakub not o...

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