DJIA, Nasdaq Price Outlook: Are the Rallies Reaching Their Limits?

Are the rallies across US indices reaching their limits? Hormuz tensions have now entered their ninth week, adding pressure to inflation, central bank expectations, and the yield outlook.

Key events to watch:

BOJ near-term intervention could support another bearish wave in USD/JPY below 154.80, while capping US indices gains amid carry trade unwind risks
US employment, growth, and inflation data, with NFP scheduled for Friday
Crude oil price risks: continuation above 115 or a pullback below 88 and 82

While these events help explain investor positioning, currently supported by positive earnings momentum, the extended rally warrants close attention to key resistance levels, particularly the four-year resistance on the Dow Jones chart, as Hormuz tensions extend to week 9.

Dow Jones Price Outlook: Monthly Time Frame – Log Scale

Source: Trading view

The Dow Jones chart signaled early caution for pullback risks at the beginning of the year, as gains tested a four-year resistance connecting consecutive highs since 2022, following the bullish rebound from 2020 and forming a potential diagonal pattern.

The Middle East conflict triggered a drawdown from 50,500 toward the lower bound of this consolidation and 2025 highs near 44800 , followed by a rebound back to the upper boundary, where prices are once again testing resistance. The key question remains: are we facing another sharp pullback, or a long-term bullish breakout?

Key levels in focus:

A close above 49,900 and 50,500 would invalidate the bearish setup and extend gains toward 51,200 and 52,700 initially
A close below 48,500 would increase downside pressure toward 47,800, 47,300, and 46,800, opening the door for either a rebound or deeper correction

Nasdaq Price Outlook: Weekly Time Frame – Log Scale

Source: Trading view

From a weekly perspective, Nasdaq momentum is showing signs of slowing near overbought levels, similar to prior peaks seen in 2024 and 2025. This raises the risk of a pullback or momentum unwind as markets realize the Q2 pressure from Hormuz-related risks over Q1 earnings.

Key levels to watch, derived using Fibonacci extensions between the April 2025 lows, October 2025 highs, and April 2026 lows, are:

27,800 (0.5)
28,900 (0.618)
30,660 (0.786)

On the downside, a break below 26,900 would reinforce a pullback toward 26,300, 26,100, and 25800, levels representing potential rebound opportunities, aligning with the consolidation zone extending between October 2025 and February 2026.

Written by Razan Hilal, CMT

Follow on X: @Rh_waves

The information on this web site is not targeted at the general public of any particular country. It is not intended for distribution to residents in any country where such distribution or use would contravene any local law or regulatory requirement. The information and opinions in this report are for general information use only and are not intended as an offer or solicitation with respect to the purchase or sale of any currency or CFD contract. All opinions and information contained in this report are subject to change without notice. This report has been prepared without regard to the specific investment objectives, financial situation and needs of any particular recipient. Any references to historical price movements or levels is informational based on our analysis and we do not represent or warranty that any such movements or levels are likely to reoccur in the future. While the information contained herein was obtained from sources believed to be reliable, author does not guarantee its accuracy or completeness, nor does author assume any liability for any direct, indirect or consequential loss that may result from the reliance by any person upon any such information or opinions.

Futures, Options on Futures, Foreign Exchange and other leveraged products involves significant risk of loss and is not suitable for all investors. Losses can exceed your deposits. Increasing leverage increases risk. Spot Gold and Silver contracts are not subject to regulation under the U.S. Commodity Exchange Act. Contracts for Difference (CFDs) are not available for US residents. Products and services available depend on your location and the entity holding your account. Before deciding to trade forex, commodity futures, or digital assets, you should carefully consider your financial objectives, level of experience and risk appetite. Any opinions, news, research, analyses, prices or other information contained herein is intended as general information about the subject matter covered and is provided with the understanding that we do not provide any investment, legal, or tax advice. You should consult with appropriate counsel or other advisors on all investment, legal, or tax matters. References to FOREX.com or GAIN Capital refer to StoneX Group Inc. and its subsidiaries. Please read Characteristics and Risks of Standardized Options.

FOREX.com is a registered FCM and RFED with the CFTC and member of the National Futures Association (NFA # 0339826). Forex trading involves significant risk of loss and is not suitable for all investors. Full Disclosures and Risk Warning. Increased leverage increases risk.

GAIN Capital Group LLC (dba FOREX.com) 30 Independence Blvd, Suite 300 (3rd floor), Warren, NJ 07059, USA. GAIN Capital Group LLC is a wholly-owned subsidiary of StoneX Group Inc.