Dow drops sharply after hawkish Fed soured sentiment
The Dow index fell around 2% on Thursday after more hawkish than expected Fed soured risk sentiment.
The US central bank surprised wide expectations that easing its aggressive interest rate hikes would lead towards an end of the policy tightening cycle, by signals of prolonged period of raising interest rates which would rise above 5%, initially marked as a terminal rate, in 2023.
Investors started to collect profits from a rally since early October, when initial signs on less aggressive Fed, prompted migration from dollar to the riskier assets, as the rally stalled on latest mixed economic data and renewed hawkish stance of the US central bank.
Technical studies are weakening on daily chart, as negative momentum is rising and south-heading RSI slid below neutrality territory, while moving averages turned to mixed setup.
Fresh bears are on track to generate initial negative signal on today’s close below pivotal support at 33470 (higher base / Fibo 23.6% of 28638/34962), which would weaken near-term structure and risk attack at key supports at 32546 (Fibo 38.2%) and 32393 (200DMA), with firm break here to generate reversal signal and open way for deeper pullback.
Res: 33835; 34086; 34420; 34705
Sup: 33188; 32546; 32393; 32210