Yesterday, the Dow Jones ended the day negative as the relief rally reached some key resistance levels. The first part of the week was rather empty in terms of data, and we did not have any speeches from the Fed due to the blackout period. This led to a relief rally which was exacerbated by weak US PMIs, with the market interpreting them as good news for inflation, although there were worrying comments from the labor market side. Starting today, we will have plenty of top-notch economic data as the new month comes with new reports.
Dow Jones Technical Analysis – Daily Timeline
Dow Jones Daily
On the daily chart we can see that the Dow has returned to 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 sellers to step in with risk set above resistance to position for a decline to the 37128 level. Buyers, on the other hand, will want to see the price move higher to the upside to invalidate the bearish setup and increase bullish bets 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 bearish pattern around the resistance of 38464 more clearly and we can also notice that the trend on this time frame has already moved higher. This could be an early signal for a rally to a new all-time high, but price will need to break through resistance to confirm this and trigger an even stronger bullish wave.
Dow Jones Technical Analysis – 1 Hour Time Frame
Dow Jones 1 hour
On the hourly chart we can see that we have a black counter-trend line that defines the current bullish momentum with the red 21 moving average acting as dynamic support. Sellers will want to see the price fall to confirm a reversal and increase bearish bets to new lows. Buyers, on the other hand, will want to see the price rise to start chasing the all-time high.
Events to come
Today we get first quarter US GDP and the latest US jobless claims numbers. Tomorrow we wrap up the week with the US PCE report.
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