Last Friday, the Dow Jones ended the day on a positive note, with the US PCE report largely in line with expectations. The market has already priced in almost all of the rate cuts expected at the start of the year and is now only expecting one in September or December. This means we will need more worrisome data to start pricing in a rate hike and put more downward pressure on the market. For now, dip buyers are in control again as we continue to erase losses from earlier in the month.
Dow Jones Technical Analysis – Daily Timeline
Dow Jones Daily
On the daily chart we can see that the Dow was rejected from the key resistance level at 38464 where we also had the confluence of the 38.2% Fibonacci retracement level and the red 21 moving average. This is where sellers stepped in with risk set above resistance to position for a decline to the 37128 level. Buyers gathered around the recent lows and managed to clear the bulk of the drop in resistance. Price will need to break strong resistance at 38464 to invalidate the bearish pattern and open the door for a rally to a new all-time high.
Dow Jones Technical Analysis – 4 hour time frame
Dow Jones 4 hours
On the 4-hour chart, we can see the recent price action more clearly with the rebound around the lows as the market smooths out the decline in US GDP and PCE data. We could get stuck here between resistance at 38464 and support at 37700, so market participants will be carefully watching where the price will break out in the coming days.
Dow Jones Technical Analysis – 1 Hour Time Frame
Dow Jones 1 hour
On the hourly chart we can see that we have another interesting area around the 38,000 level where we have received several rejections in the past. If price were to fall below this zone, sellers will likely already be piling in to position themselves for a decline below support with a better risk/reward setup.
Events to come
Tomorrow we have the first quarter US employment cost index and the consumer confidence report. On Wednesday we have US ADP, ISM manufacturing PMI, job postings and the FOMC rate decision. On Thursday we will see the latest figures for jobless claims in the United States. On Friday, we conclude the week with the American NFP and the ISM Services PMI.
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