Yesterday, the US30 sold off into the close as the
Fed came out a bit more hawkish than expected. In fact, not only the statement
contained a line that hinted to a pushback against the March cut, but also Fed
Chair Powell doubled down saying that a March cut was not their base case. All
of the above though is conditional to the data as they just want to see
inflation continuing to slow towards their target. If we get some weak reports,
especially on the labour market side, then the Fed will have more confidence in
delivering a rate cut in March.
US30 Technical Analysis –
Daily Timeframe
US30 Daily
On the daily chart, we can see that the US30 is approaching a key support
zone around the 37800 level where we can also find the confluence of the 50%
Fibonacci retracement level and the red 21 moving average. This is where we can
expect the buyers to step in with a defined risk below the support to position
for a new all-time high. The sellers, on the other hand, will want to see the
price breaking lower to invalidate the bullish setup and target a drop into the
37125 level.
US30 Technical Analysis – 4
hour Timeframe
US30 4 hour
On the 4 hour chart, we can see that the latest leg
higher diverged with the MACD which is generally a sign of weakening momentum
often followed by pullbacks or reversals. In this case, given the break below
the trendline, we should have got a confirmation of a reversal, and the target
should be the previous swing low which stands right around the 37800 support
zone.
US30 Technical Analysis – 1
hour Timeframe
US30 1 hour
On the 1 hour chart, we can see more
closely the recent price action and we can notice that the market is rolling
over from the resistance around at the 38230 level. This is where the sellers
are stepping in for a continuation of the selloff from yesterday. If the price
were to break above the resistance, the buyers might pile in already to target
a new high but there’s a risk of seeing a fakeout some traders will need to be
nimble around this level. From a risk to
reward perspective, the support zone around the 37800 level remains the best
spot for new long positions.
Upcoming
Events
Today we get the latest US
Jobless Claims figures and the ISM Manufacturing PMI. Tomorrow, we conclude the
week with the US NFP report.