The daily timeframe (left chart) of FXCM's Dow Jones Industrial Average CFD, the US30, shows the index heikin ashi (HA) candles, a trend-following indicator. Last week Wednesday and Thursday had extraordinary volatility - on the HA, this indicates as two blue candles (black ellipse). Moreover, the index trades in the weak area between its lower blue and red bands. As such, this volatility is considered a rally in a downtrend.
The hourly (chart on the right) shows the short-term trend following indicators in bear formation, with the green EMA below the orange EMA. The stochastic is below 20 (green rectangle). If it maintains this position, the index will likely continue under renewed selling pressure.
Stocks are under pressure following the Fed press conference last Wednesday. Fed Chair Powell took 75bps off the table for the next two meetings, and the market is now questioning this, given the rampant inflation.
Senior Market Specialist
Russell Shor joined FXCM in October 2017 as a Senior Market Specialist. He is a certified FMVA® and has an Honours Degree in Economics from the University of South Africa. Russell is a full member of the Society of Technical Analysts in the United Kingdom. With over 20 years of financial markets experience, his analysis is of a high standard and quality.