A closer look at the technical picture on the Dow Jones

Following on from an earlier update today, where I said I would look at the technical picture of the Dow Jones, here is some colour on that now. The close below 34k on Friday endorsed what was a technical breakdown below rising trend line support that had played out earlier in the week, when the index broke below 34,435. It had left a downside gap open the following day, when it extended the fall to as low as 34,058 on Thursday. That low at 34,058 was right on a major Fibonacci retracement level, at 34,055. This price point represented a 38.2% retracement of the whole 2023 move, from the March low at 31,429, to the August 1 high at 35,679. The close on Friday (at 33,963) below 34,055 does open the possibility of the index now extending to the next major support. That is the 50% retracement and this is in place at 33,554. Only a sustained rise above 35k again from here on would tend to negate such a prospect. There is also the possibility of the index forming a slanted Head and Shoulder formation too. That could, and I stress could, deliver a measured move lower to as low as 32,379 over time. However, that is far from a conclusion that is being advocated here yet.