Last week, we got another set of good economic data
for the US with signs of further disinflation in the core inflation measures.
The soft-landing narrative should be in full swing with resilient labour
market, lower inflation, and lower inflation expectations. Nonetheless, the Dow
Jones price action remains rangebound, and at this point it might even be
because we are getting near to the FOMC rate decision. Looking forward, the
uncertainty is very high as we either get a soft or hard landing, but the weakness
in other economies like the Eurozone skews the picture to the worse scenario.
Dow Jones Technical
Analysis – Daily Timeframe
Dow Jones Daily
On the daily chart, we can see that the Dow Jones
rallied again into the 35000 resistance but got
rejected. The price action between the trendline and the
resistance is forming an ascending triangle and a
breakout on either side generally leads to a strong and sustained move.
Therefore, the best strategy at the moment might be to patiently wait for a
breakout.
Dow Jones Technical
Analysis – 4 hour Timeframe
Dow Jones 4 hour
On the 4 hour chart, we can see that we also had
the probability that this consolidation was forming a symmetrical triangle but
the recent failed breakout should suggest that this wasn’t the case here. Nonetheless,
this might even be a signal that the bearish momentum is stronger as we got a
fakeout, which is generally a reversal pattern.
Dow Jones Technical
Analysis – 1 hour Timeframe
Dow Jones 1 hour
On the 1 hour chart, we can see that the
price action is choppy and there’s no clear support or resistance level except
the 35000 level and the major upward trendline. In fact, if the price falls to
the trendline, the buyers should step in with a defined risk below it to position
for another rally and target a new high. Alternatively, we should also see the
buyers piling in aggressively if the price breaks above the 35000 resistance.
The sellers, on the other hand, should do the opposite by leaning on the resistance
with a defined risk above it to position for another selloff and pile in even
more aggressively if the price breaks below the trendline.
Upcoming Events
This week has just a couple of important economic
releases with the FOMC rate decision on Wednesday being the highlight. The Fed
is expected to keep rates unchanged, and the market will focus more on the Dot
Plot and Fed Chair Powell’s press conference, although he’s likely to repeat
that they remain data dependent. Moving on to Thursday, we will see another US
Jobless Claims report, while on Friday we conclude the week with the US PMIs
data.