Dow Jones Bulls Take a Breather as Focus Shifts to the Fed Interest Rate Decision

Piece written by Mfanafuthi Mhlongo, Trive Financial Market Analyst 

The Dow Jones Index Futures (CBOT: YM) are trading flat on Tuesday as the price action halted its spectacular bullish run as the market shifted its attention towards the highly-anticipated Fed’s interest rate decision for July.  

The index futures have closed nine sessions out of eleven in the green as the price action looks to recover from the seven-week low achieved on the 10el of July 2023. The market now turns to the earnings release of the index constituents Microsoft Corp (ISIN: US5949181045) and Visa Inc (ISIN: US92826C8394), due after the bell on Tuesday, ahead of the Fed’s interest rate decision on Wednesday. 


The 4H chart shows that the index futures are trading sideways ahead of the Fed interest rate decision, with the market pricing a 98.9% probability for a 25-basis point rate hike, according to the CME FedWatch Tool. Therefore, for a bull case, a trading opportunity could exist should the price action continue its trend higher towards the 35744 resistance, with the 35996 resistance level likely to act as the next level of significance. 

For the downside, a short-term trading opportunity could exist as the price action approaches the 50-SMA (blue line) and 23.60% Fibonacci retracement level at 35202. A break below the level could confirm the change in sentiment, likely leaving the 61.80% Fibonacci retracement level at 34499 as the next level of significance. 

The index futures have established a major resistance and support at the 36333 (green line) and 33797 (red line) price levels, respectively. 


The index futures are consolidating ahead of the earnings release of its major constituents after the bell and the Fed decision on Wednesday. Positive earnings would likely boost the index futures and bring the 35744 resistance level into play ahead of Wednesday’s session. However, disappointing results could ensure the index closes the session under bearish pressure. 

Fuentes: TradingView, KoyFin, Reuters, CME, Trading Economics.