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Dow Jones index waiting for the next trend

Market analysis

US equities fell last week as profit-taking entered the market in quiet conditions. The rise in October saw prices move significantly higher than the 10-day moving average, indicating an overbought market.

Following the announcement that US official interest rates would increase by 0.75% to 4.00%, the Dow fell as the Fed chairman suggested more interest rate rises are required to fight inflation. Friday’s US employment beat expectations which saw the Dow push higher to end the week.

The outlook from here is a little difficult to judge now the market has corrected the overbought condition. There are no large news events expected this week, so short-term traders should focus on range trading. Longer-term traders are better off selling around these levels or waiting for the market to fall and to buy.

Daily NY Dow with 10 day moving average

Resistance:33000, 34000, 34300, 35000

Support:31725, 31000, 30000, 29000, 28500, 27500, 26500

Tips to improve your Dow trading performance

1. Focus on US trading hours

While Dow CFDs can be traded 24 hours a day, presenting many opportunities, it is better to focus on when the US market is active from 9:30 am New York time. Trading when the market is most active makes it easier to find profitable trades.

2. Be careful trading around economic announcements 

The Dow Jones index can have big moves around US economic announcements, so the potential for large profits or losses is high. When short-term trading, it is usually a good idea to exit positions before an economic announcement to avoid an unexpected loss. When longer-term trading, place a stop loss order ahead of economic announcements to control your risk. 

Trading economic announcements can be very profitable in the Dow if you have a strategy that you have researched beforehand. The Dow has high volatility following economic announcements, so well-prepared traders can make large profits.

3. Avoid trading US holidays 

When there is a US holiday, the Dow can be very quiet and difficult to trade. It is better not to trade the Dow on US holidays and review your recent trading performance. Finding ways to avoid making poor trades can have a very positive impact on your trading.