DJIA and Bitcoin Outlook: Are Charts Facing Contrarian Sentiment Risks?

Risk sentiment has fallen into the extreme-fear zone, sparking contrarian interest and potential dip-buying opportunities. This comes as geopolitical tensions rise again and US bond yields pull back from extreme momentum conditions.

Risk Sentiment: Extreme Fear or Another Contrarian Signal?

Source: CNN Fear & Greed Index

The Fear & Greed Index has returned to the extreme-fear zone, which may offer a contrarian signal as major elections in Israel and the United States approach. Dip-buying opportunities may emerge, but close risk management remains essential. Reassess positions if key invalidation levels are breached.

The Dow Jones Industrial Average (DJIA) is sustaining its rebound from 50,500, keeping the bullish outlook intact, while Bitcoin is holding above the previously identified support near 79,000.

US 10-Year Treasury Yield: 3-Month Time Frame – Log Scale

Source: TradingView

The latest pullback in US 10-year Treasury yields aligns with a historically significant resistance barrier dating back to the 1920s. Bearish-divergence risks have also emerged as momentum retreats from overbought levels last seen in 2022 and 1980. Together, these signals raise the possibility of a longer-term decline in yields, which could help set the stage for a sustained market uptrend.

The yield is currently testing support near 5%, while inflation concerns persist. A break below this level could support risk appetite. By contrast, a move above 5.34% could put pressure on markets and expose charts to fresh 2026 lows.

DJIA Price Outlook: Daily Time Frame – Log Scale

Source: TradingView

On the daily chart, the bullish outlook for the Dow remains valid above 50,300, despite the breakdown below the April–September uptrend.

The key level to watch for confirmation of the bullish-continuation scenario is 52,600. A break above it would bring 53,100, 53,800 and 54,500 into focus, respectively. These levels are derived using the Fibonacci extension tool across the May 15, August 5, and October 1 wave.

Downside risks would increase below 51,300, 50,900 and 50,300, potentially exposing the Dow to a longer-term corrective cycle. These levels are derived using the Fibonacci retracement tool across the May 15 - August 5 uptrend.

US Treasury yields, inflation, crude-oil trends and corporate earnings are likely to be major catalysts for volatility in the index over the next two weeks.

Bitcoin Price Outlook: Daily Time Frame – Log Scale

Source: TradingView

Bitcoin’s rebound from the yearly low near 58,000 to the high near 87,000 is viewed here as an impulsive wave. The latest correction toward 79,000 aligns with the 27.2% retracement of that move.

With daily RSI fluctuating near the neutral zone, 79,000 may serve as a stepping stone for another rally. A move back above 84,000 and 87,000 would bring 91,000, 95,000 and 98,000 into focus, respectively.

On the downside, a break below 79,000 would expose the 38.2%, 50% and 61.8% retracement levels near 76,000, 72,000 and 69,000 as potential areas to watch for dip-buying opportunities.

Written by Razan Hilal, CMT
Follow on X: @Rh_waves

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