The Dow Jones Industrial Index (#INDU) is trading below the 200 EMA and below the 21 SMA, in a bearish scenario with a probable technical bounce off the 34,500 or 34,375 level.
In the early American session yesterday, the Dow Jones was trading at the 34,900 level but after the US inflation data, the Dow fell below the 200 EMA until it found support at the 34,500 level.
Another factor that is affecting the Dow Jones index is economic uncertainties and the probability of a rise in corporate tax rates. This is creating uncertainty in investors and assures them to liquidate their orders and buy positions despite the signs of inflation relief that were published yesterday.
Corporate tax increases from 21% to 26.5% are closer to being realized with the $ 3.5 trillion budget package proposed by US President Joe Biden. If this happens, it could negatively affect the Dow Jones and others indices such as the Nasdaq 100 and SP 500.
On the other hand, the CPI report published yesterday showed an August reading below the consensus. This downtick supports the assertion of the chairman of the Federal Reserve, Jerome Powell, that the spike in inflation is temporary and could provide some relief to investors.
According to the 4-hour chart, we can see the 34,500 level as important support because on August 19, the Dow Jones rebounded from this level. Now it could be the key level. While the index trades above this level, there will be a good opportunity to buy.
If the bearish pressure breaks this support at 34,500, another support is observed at the 4/8 murray line around 34,375. This level will be also a good point to buy. As the eagle indicator is approaching the oversold level, there could be a technical bounce in the next few days.
Support and Resistance Levels for September 15 - 16, 2021
Resistance (3) 35,206
Resistance (2) 34,901
Resistance (1) 34,765
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Support (1) 34,390
Support (2) 34,191
Support (3) 34,024
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Trading tip for DOW JONES 30 #INDU for September 15 - 16, 2021
Sell if the index pulls back at 35,150 (EMA 200) with take profit at 34,765 and 34,500, stop loss above 35,210.
Buy if the #INDU rebounds at 34,500 or 34,375 with take profit at 34,765 and 35,059 (EMA 200), stop loss below -50 pips.
