Mapping the Market: Dow eyes another run at a rally
By Terence Gabriel
Oct 14 (Reuters) - The Dow Jones Industrial Average has been climbing in recent sessions. Even so, it's still closer to its four-month lows than to its record high. Its main index peers, the S&P 500 and Nasdaq Composite, both hit all-time highs last week. A new slide looks less likely after the recent bounce, but several hurdles stand between the Dow and fresh peaks, technical analysis suggests.
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Click here for a detailed technical analysis chart.
Technical analysis uses past price moves on charts to help map out market scenarios. Chart watchers look for support, a price level that acts like a floor because buyers tend to step in there. They also look for resistance, a level that acts like a ceiling because sellers tend to show up there.
One tool for finding these levels is called Fibonacci retracements. Markets rarely move in a straight line. When they pull back after a big move, they often give up a fairly predictable share of their gains, such as 23.6%, 38.2% or 50%. Analysts mark these percentages on charts as possible turning points.
Lately the Dow has found support near 51,043. That level is the 38.2% retracement of its rally from March to August, according to data supplied by LSEG. The index dipped below it in late September and early October, but those drops were small and didn't last. For now, bulls seem to be treating that area as a floor.
The problem is that resistance sits just overhead. The first barrier is now the 100-day moving average near 52,180. A moving average tracks a market's average price over a set period, smoothing out daily swings to show the underlying trend. The next is the September 22 high at 52,319.01, which makes that area even more important. Past highs and lows matter because prices often stall when they reach them again.
Above the September 22 high are the 23.6% retracement at 52,458 and the 50-day moving average, which is falling and currently near 52,591.
If the Dow can close above that cluster, it would suggest the rebound is picking up strength. That would put the August highs back in view.
However, on Tuesday the Dow hit 52,317.32, essentially touching the September 22 high, before retreating to end at 51,670.10. Bulls will look for the blue-chip average to stabilize and make another go at resistance.
If the Dow closes back below 51,403, the recovery would look shaky. Support could then come from the October 1 low near 50,547, the early-February high at 50,513 and the rising 200-day moving average near 50,388, a widely watched measure of the long-term trend.
Below there, the June 10 low at 49,909, the 50% retracement at 49,900 and a trendline near 49,800 could all come into play. A trendline is a straight line drawn through a series of past highs or lows. This one runs upward from the April 2025 low. A drop to that zone would leave the Dow roughly 8% to 9% below its record highs.
What the chart shows:
• Dow holding support near 51,403
• A close above the 52,180 to 52,591 resistance zone would put August highs back in focus
• A close below 51,403 risks a slide toward the 49,800 to 50,547 area
(Mapping the Market is a daily column written by Reuters journalists. The commentary is based on a technical analysis of financial charts, which helps assess the likelihood of future price moves but does not guarantee the outcome. The column does not constitute investment advice or trading recommendations. )