The miss in the US CPI
report and the better-than-expected US Retail Sales and Jobless Claims last week, gave the Dow Jones
enough strength to probe above the key resistance at 35289 and opening the door
for the all-time highs. As long as the current soft-landing narrative continues
to remain intact and the data doesn’t point to an imminent recession, we should
keep seeing the dips being bought and the Dow Jones reaching new highs.
Dow Jones Technical
Analysis – Daily Timeframe
Dow Jones Daily
On the daily chart, we can see that the Dow Jones
is probing out of a key resistance level at
35289 and if the buyers manage to sustain the breakout, it will open the door
for a rally back to all-time highs. At the moment, giving the FOMC risk on
Wednesday, and the profit taking and defensive positioning we’ve been seeing in
other markets, we are likely to see a pullback in the Dow Jones as well. That
would be a good opportunity for the buyers to buy the dip in case the economic
data keeps on leaning towards the soft-landing scenario.
Dow Jones Technical
Analysis – 4 hour Timeframe
Dow Jones 4 hour
On the 4 hour chart, we can see that the Dow Jones
has been consolidating just above the key resistance since the breakout last
Thursday. We have some important confluences here
with the red 21 moving average acting
as dynamic support and the upward trendline defining
the uptrend. Here’s where we are likely to see the buyers stepping in with a
defined risk below the trendline to target the all-time highs. The sellers, on
the other hand, will want to see the price breaking below the trendline to
invalidate the bullish setup and position for a fall into the major trendline.
Dow Jones Technical
Analysis – 1 hour Timeframe
Dow Jones 1 hour
On the 1 hour chart, we can see that the
latest rally that led to the breakout is diverging with
the MACD. This
is generally a sign of weakening momentum often followed by pullbacks or
reversals. In this case, we might see the price pulling back to the above-mentioned
zone near the trendline where we can also find the 38.2% Fibonacci
retracement level for further confluence. A break
below this support zone would invalidate the bullish setup and give the sellers
control at least until the major trendline near the 34500 level.
Upcoming Events
There
will be many important events this
week. Today, we will see the US PMIs and we can expect a bearish reaction in
case the data misses expectations and a bullish outcome in case the data beats.
Moving on to Wednesday, we will have the FOMC rate decision where the Fed is
expected to hike by 25 bps. On Thursday, it will be the time for the US Jobless
Claims where the market will want to see good data to keep the soft-landing
narrative intact while a big miss could ignite some recessionary fears and lead
to a selloff. Finally, on Friday, we will have the US PCE and ECI reports.