Dow Jones Bulls Lock Horns At Resistance Level: What's Next For Blue-Chip Gauge?

The Dow Jones Industrial Average kicked off the new week positively, surging 0.6% and matching Friday’s gain.

Yet the inability to overcome a crucial technical resistance that is proving much more challenging than anticipated is starting to generate nervousness and apprehension among the bulls.

After breaking below the 50-day moving average (50-dma) on Aug. 17, the Dow Jones has not closed above the level since then, and several attempts by the bulls to breach this level have been unable to overcome the bear’s barricade.

During Monday’s trading session, the blue-chip index, tracked by the Dow Jones Industrial Average ETF DIA, reached an intraday peak of 34,652 points, ultimately falling short of surpassing the 50-dma at 34,666. This marks the seventh consecutive session with the Dow Jones trading below the 50-dma resistance, resembling a similar scenario experienced at the end of May 2023.

Despite some improvements in key momentum indicators like the daily relative strength (RSI) index in recent sessions, a downward trend has persisted since late July, solidifying the observed price action.

Dow Jones Industrial Average Daily Chart: Moving Averages, RSI

Dow Jones’ Breadth Fading

Furthermore, the Dow’s “market breadth,” a measure indicating the percentage of index components trading above the 50-day moving average, has decreased from 86% at the close of July to 40%, underscoring the increasing dissemination of weakness within the constituent stocks of the Dow Jones.

Dow Jones: Key Levels To Watch

Resistance levels to keep an eye on:

34,666: 50-dma
35,000: psychological
35,200-35,350: mid-August highs
35,679: peak achieved Aug. 1

Support levels to keep an eye on:

34,051: August low and 38.2% Fibonacci retracement of the 2023 high-to-low range
33,742: 200-day moving average
33,550: 50% Fibonacci
33,000-33,048: psychological and 61.8% Fibonacci
32,334: 78.6% Fibonacci
31,425: 2023’s Low