The Dow Jones Industrial Average cash index traded higher yesterday and today, after it hit support at 33100. However, in our view the overall near-term picture remains negative, as the price structure on the 4-hour chart remains of lower highs and lower lows, while the index remains below the key territory of 34120, which acted as a key support between April 7th and 13th, and as a key resistance between February 25th and March 3rd.

The current recovery may continue for a while more, even above yesterday’s high of 33700, but we do see decent chances for the bears to take charge again from near the 34120 zone. This could result in another leg down to the 33100 zone, the break of which will confirm a forthcoming lower low and may pave the way towards the 32800 territory, which provided decent support between March 10th and 15th. If the sellers are not willing to stop there either, then we could see them pushing the action down to the 32290 territory, marked as support by the lows of February 24th and March 8th.

Shifting attention to our short-term oscillators, we see that the RSI, although below 50, has turned up again, after hitting support near the 30 line, while the MACD, although negative, lies above its trigger line, pointing up as well. Both indicators detect slowing downside speed and support the notion for some further recovery before the next leg south.

In order to start examining the bullish case again though, we would like to see a clear break above the 34320 zone, which provided support on April 18th and 19th. The index will already be above the key zone of 34120, the break of which will confirm a forthcoming higher high. The bulls could take the battle towards the 34600 zone, or the 34800 territory, defined by the high of April 22nd, the break of which could see scope for advances towards the high of April 5th, at 35100. If they don’t stop there either, then we could see them pushing towards the high of April 21st, at 35490.