(MENAFN- Daily Forex)
The dow jones Industrial Average went back and forth during the trading session on Tuesday as we continue to see a lot of questions asked about the future direction of the market. After all, the federal reserve looks as if it is going to continue to tighten monetary policy, and with the Dow Jones 30 having so many of the largest industrial companies in the world as part of it, it's obviously going to be greatly influenced by what happens next. I believe at this juncture we have a situation where we are paying attention to not only the 50-Day ema below but the downtrend line from the triangle just above. In other words, we are about to see a bit of a squeeze.
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If we do break down below the 50-Day EMA, then it's possible that we could go down to the 200-Day EMA, but it would also be the breaking of a triangle, therefore I think we would probably see even further downward pressure. In that scenario, I could see the market bouncing a bit, only to turn around and attract more selling pressure. This would obviously be very bearish and could send the market plunging. It would probably be a general market selloff, not just this particular index.US Dollar to be a Major Influence
Pay close attention to the US dollar, because I can have a major influence on what happens next as well, as Wall Street continues to pay more attention to liquidity than anything else. Speaking of anything else, we are in the midst of earnings season, so that could come into play as well.
On the other hand, if we do break to the upside and clear the 34,375 level, then we could send the market toward the 35,000 level. That's an area that's a large, round, psychologically significant figure, and therefore would attract a lot of attention and more likely than not have people looking at a place to take profit. Regardless, I think if we get to that point, we probably continue much higher and continue to rally in the face of the federal reserve . Keep in mind that the stock market and the economy are 2 different things, so try not to spend too much time making sense of it rallying while the economy itself is testy at best.
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