Yesterday, the Fed left interest rates unchanged at
5.25-5.50% as expected but revised its outlook on the more hawkish side. In
fact, the Fed not only sees another rate hike by the end of the year but also
much less rate cuts in 2024 as they revised it from 4.6% seen in June to 5.1%
now. The macroeconomic projections were also revised higher indicating a
resilient economy. In the press conference Fed Chair Powell
reaffirmed their data dependency and the need to move carefully as they
approach the terminal rate. One thing that caught everyone by surprise is when
asked if he would call the soft landing a baseline expectation now, Powell said “No, I would not do that”.
Dow Jones Technical
Analysis – Daily Timeframe
Dow Jones Daily
On the daily chart, we can see that the Dow Jones
is now threatening a key breakout as the price fell to the trendline
following the FOMC meeting. This is where the buyers should step in with a
defined risk below the trendline to position for a rally into the 35000 resistance. If the
price breaks through the trendline, the sellers will pile in even more
aggressively and extend the selloff into the 33622 level.
Dow Jones Technical
Analysis – 4 hour Timeframe
Dow Jones 4 hour
On the 4 hour chart, we can see that the price has
already tried to rally from the major trendline recently but failed to break
above the downward trendline eventually falling back to the major trendline.
This might be a sign that the sellers are stronger, and the breakout is indeed
in the cards. The next few days will be very important for the Dow Jones.
Dow Jones Technical
Analysis – 1 hour Timeframe
Dow Jones 1 hour
On the 1 hour chart, we can see that
besides breaking out of the trendline, the price will need to take out the
recent low at 34310 to confirm the breakout and make a new lower low. That’s
when the sellers are likely to pile in even more aggressively and the buyers
are likely to fold increasing the bearish momentum.
Upcoming Events
The week is drawing to a
close, but we still have a couple of key economic releases ahead. Today, the main event will be the US Jobless Claims
report as the labour market data remains very important for the Fed and the
market. Tomorrow, we will see the latest US PMIs data which is expected to be
market moving.