On the daily chart below, we can
see that the Dow Jones has bounced from the key 32684 support as positive news on the debt
ceiling deal lifted the sentiment last Friday going into the weekend. The
market positioned for a possible deal over the weekend and sure enough, Biden
and McCarthy announced
a deal yesterday.

The Dow Jones opened with a
positive gap in electronic trading hours that soon after got closed. We may now
see a classic “sell the fact” trade where the market trades into an expected
outcome and then reverses when the outcome is confirmed. The red 21 period moving
average will be the one to watch as the sellers lately leant on that to
position for more downside.

Dow Jones Technical Analysis

On the 4 hour chart below, we can
see that as we expected last Friday, the Dow Jones bounced from the 32684
support. The long candlesticks wicks on the support were giving a clue that the
buying pressure was high there. The rally broke above the 33000 resistance and
hit today the next 33300 resistance.

From here, we should see a
pullback and then another push into the 33800 level in case the “sell the fact”
trade is invalidated. On the other hand, if we do get the “sell the fact”
scenario, the Dow Jones should fall from here back to the 32684 level and
possibly stretch beyond that.

In the 1 hour chart below, we can
see that the buyers will have the confluence of the 38.2% Fibonacci
retracement level and the red 21 period moving average near
the 33000 resistance
turned support. This will be a key buying zone with a limited
risk just below it. The sellers, on the other hand, will want to see the Dow
Jones to break below that zone to pile in for a bigger fall into the 32684
support.

This article was written by ForexLive at www.forexlive.com.