Last Friday, the Dow Jones ended the day positive following the American NFP report. In fact, the data beat expectations across the board, showing once again that the labor market remains resilient without much inflationary pressure as wage growth continues to slow. The focus will now be on US CPI data on Wednesday, as a hot report could change the Fed’s near-term strategy and further delay rate cuts.
Dow Jones Technical Analysis – Daily Timeline
Dow Jones Daily
On the daily chart, we can see that the Dow is trading in an ascending channel and continues to diverge with the MACD for a long time. This is usually a sign of weakening momentum, often followed by pullbacks or reversals. Last week we had a breakout that opened the door for a larger correction towards the 37128 level. Price rebounded off the first support level at 38464 following the Goldilocks NFP report, but it is l US CPI that will decide whether this was just a dead cat bounce or a reversal.
Dow Jones Technical Analysis – 4 hour time frame
Dow Jones 4 hours
On the 4-hour chart we can take a closer look at the recent breakout and bounce around support 38464. Price was a bit too extended around support anyway, as seen by the distance from the blue moving average 8. In such cases, we can usually see a pullback towards the moving average or some consolidation before the next move.
Dow Jones Technical Analysis – 1 Hour Time Frame
Dow Jones 1 hour
On the hourly chart we can see that we have a downtrend line where we can also find the confluence with the red 21 moving average and Fibonacci retracement levels. This is where we can expect sellers to step in with a set risk above the trendline to position for a break below 38464 support with a better risk/reward setup. Buyers, on the other hand, will want to see the price rise to invalidate the bearish setup and increase bullish bets to a new all-time high.
Events to come
This week is going to be a little quieter on the data side, with US CPI being the main highlight. On Wednesday we will have the US CPI report which will likely decide whether the Fed will further delay rate cuts. On Thursday we will receive the US PPI and the latest US jobless claims figures. Finally, on Friday we wrap up the week with the University of Michigan Consumer Sentiment Survey.
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