Yesterday, the Dow Jones ended the day negative as the relief rally reached some key resistance levels. The first part of the week has been pretty empty on the data front, and we hadn’t any Fedspeak due to the blackout period. This has led to a relief rally which was exacerbated by weaker US PMIs as the market interpreted them as good news for inflation, although there were some worrying commentary on the labour market side. Beginning today, we will have many top tier economic data ahead as the new month comes with new reports.
Dow Jones Technical Analysis – Daily Timeframe
On the daily chart, we can see that the Dow Jones pulled back into the key resistance level at 38464 where we can also find the confluence of the 38.2% Fibonacci retracement level and the red 21 moving average. This is where we can expect the sellers to step in with a defined risk above the resistance to position for a drop into the 37128 level. The buyers, on the other hand, will want to see the price breaking higher to invalidate the bearish setup and increase the bullish bets into a new all-time high.
Dow Jones Technical Analysis – 4 hour Timeframe
On the 4 hour chart, we can see more clearly the bearish setup around the 38464 resistance and we can also notice that the trend on this timeframe has already shifted to the upside. This might be an early signal for a rally into a new all-time high, but the price will need to break above the resistance to confirm it and trigger an even stronger bullish wave.
Dow Jones Technical Analysis – 1 hour Timeframe
On the 1 hour chart, we can see that we have a black counter-trendline that is defining the current bullish momentum with the red 21 moving average acting as dynamic support. The sellers will want to see the price breaking lower to confirm a reversal and increase the bearish bets into new lows. The buyers, on the other hand, will want to see the price breaking higher to start targeting the all-time high.
Upcoming Events
Today we get the US Q1 GDP and the latest US Jobless Claims figures. Tomorrow, we conclude the week with the US PCE report.
