Following the more hawkish than expected FOMC meeting, the market sold off going into the Christmas holidays, including the Dow Jones. The lower volume and news flow during the holidays led to a rangebound market. The risks now are a deep recession coupled with a possible overtightening from the Fed.

These risks keep the bearish bias intact. The China reopening news during the holidays also could lead to more inflationary pressures, which may force the Fed to go higher than their projected terminal rate of 5.1%.

DOW JONES Technical Analysis

In the daily chart above, we can see how the market was trading in a rising channel before it failed to break the 35400 resistance and then broke down as the Fed reiterated their hawkish stance. The price action in the channel was diverging with the RSI signalling a loss of momentum.

Generally, the target is the bottom of the channel, which in this case comes at 31761. Right now, the price is stuck in a range trying to break the resistance zone in the 33650 area. That should be the level dividing the bearish from the bullish bias in the short term.

Buyers will need to break that zone to further target the 35400 resistance. Failure to do so, will keep sellers in control and target the 31761 level, with a further continuation to the downside in case of a break down.

In the 1-hour chart above, we can see more closely the rangebound price action. The resistance comes at 33615 and the support at 32990. In such instances, it’s better to stay out of the market and wait for a clear breakout. But one can also play the range and sell at resistance or buy at support depending on your personal bias.

Zooming in to the 15 minutes chart, we can see there’s a divergence between the price and the RSI. That should point to a pullback in the near term. The level that should define the next move should be the support at 33322. This opens up to two possible scenarios:

· The price bounces from the level and runs to the upside targeting the 33615 resistance.

· The price breaks the level and falls further to the 32990 support.