Dow Jones Faces Rejection at 42,800 | RSI & MACD Turning Bearish | Market Outlook 22 May 2025

 Dow Jones Faces Strong Rejection at 42,800: What's Next?

Date: 22 May 2025 | Index: Dow Jones Industrial Average (DJIA)

 Key Technical Observations:

• Major Resistance: The Dow Jones faced a sharp rejection at the critical 42,800 level, which has acted as a supply zone multiple times in the past.
• Moving Averages: Price is now trading below the 50-day and 20-day moving averages, indicating renewed bearish momentum.
• RSI: The Relative Strength Index is turning down from overbought zones, currently near 50 levels. A breakdown below 45 could trigger further weakness.
• MACD: Histogram turning negative, with the MACD line about to cross below the signal line — a bearish crossover possibility ahead.

 Importance of 42,800 Level:

42,800 was a crucial resistance zone where markets got rejected on 21 May 2025. A sustained move above this would have confirmed a bullish breakout, but repeated failures here suggest a distribution zone with institutional selling pressure.

 Global Market Cues:

• US Federal Reserve hinting at possible interest rate hikes due to stubborn inflation.
• Rising bond yields weighing on equity valuations.
• Mixed corporate earnings season, with key Dow components like Home Depot and Walmart issuing cautious outlooks.
• Geopolitical tension between US and China tech sectors adding risk-off sentiment.

 What to Watch Ahead:

• Support zone at 41,700. A break below may trigger a sharp decline towards 40,700.
• RSI holding 45 level could lead to a bounce attempt.
• MACD crossover confirmation on daily charts.
• US inflation and unemployment data due Friday.

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