Bears are taking a breather on Friday, as traders collects profits after a sharp fall this week (the index was down over 3% during Mon/Thu period.
Today’s bounce from new multi-month low (the lowest since Feb 2021) eases immediate downside pressure, but the Dow is still on track for strong weekly loss ( the sixth consecutive weekly close in red).
Corrective action was signaled by Thursday’s long-tailed daily candle and oversold conditions, with fresh bulls trading above initial resistance at 31824 (Fibo 23.6% of 34017/31146 bear-leg), but needs more work at the upside and violation of pivotal Fibo barrier at 32243 (38.2%) to generate initial reversal signal.
Turbulent geopolitical and economic conditions are likely to keep traders away from risky assets, suggesting that current correction is likely to be limited and offer better selling opportunities, with the base of thick weekly cloud (32781) expected to cap and keep larger bears in play.
Res: 31958; 32152; 32243; 32501.
Sup: 31678; 31561; 31456; 31338.