Fly-By of the Dow
Before the Federal Reserve announces their decision, let’s take a very quick look at the current technical picture of the Dow Jones Industrial Average:
- Price is just under 400 points away from all-time highs.
- Price made a new momentum high (annotated NMH in the bottom oscillator)
- There is a convergence of support from all three key moving averages and a horizontal trendline which should thwart selling pressure (unless the Fed actually raises rates)
- Price is above all key moving averages
- Price carved out a new swing high
- Price is still in a confirmed downtrend on the daily chart, though very close to switching back to an uptrend
- We see Non-Confirmation by Volume, as higher prices have been met with lower volume. This is temporarily bearish.
- Price is at the top of the daily Bollinger Band (bearish to neutral)
Of course, all this could change when the Federal Reserve announces their rate policy later.
A cut of .50 should cause price to rocket through the Bollinger and potentially make new all-time highs by the end of the week.
A rate increase will likely take price beneath key support, though this is highly unlikely and would surprise about 90% of traders/investors.
It looks like the market has already discounted the expectation of a .25 basis point cut by the Fed.