factors such as a higher unemployment rate and lower average weekly hours, the
recent release of the NFP data has not significantly impacted the Dow
Jones. The labour market has shown resilience, albeit with some looseness,
potentially leading to lower inflation without causing severe damage to the
economy.
Additionally, the market
has not been affected by the underperformance of the ISM Services PMI. On the contrary, the sub-index
indicating lower prices paid has fuelled speculation that core inflation could
decrease without causing substantial harm.
The market viewed the
significant miss in Jobless Claims with caution, considering the
impact of seasonal adjustments, while also acknowledging the improvement seen
in Continuing Claims. Overall, the market chose to emphasize the positive
aspects of the data rather than dwell on the negatives.
Dow Jones Technical
Analysis – Daily Timeframe
On the daily chart, we can see that the Dow Jones
has rallied strongly as soon as it broke out of the downward trendline. The
price stalled at the 33854 swing level resistance, but
picked up shortly after breaking above it and extended the rally towards the
key resistance zone at 34477. The price looks overstretched now as depicted by
the distance with the blue 8 moving average.
Generally, the price pulls back into the moving average to find a new
equilibrium before the next move.
Dow Jones Technical
Analysis – 4 hour Timeframe
On the 4 hour chart, we can see that we have a divergence with the
MACD, which
is generally a sign of a weakening momentum often followed by pullbacks or
reversals. Given that we are near the key resistance zone, this divergence may
be significant. If we do get a pullback, the best support zone is at the 33854
level where we can find the confluence with the
50% Fibonacci retracement level
and the red 21 moving average.
Dow Jones Technical
Analysis – 1 hour Timeframe
On the 1 hour chart, we can see more
closely the short-term price action with the strong support level at 33854
highlighted with the blue area. From a risk management perspective, this is the
best place where the buyers can re-enter the market with a defined risk just
below the zone and target the 34477 resistance first and a breakout afterwards.
The sellers, on the other hand, can lean only on the 34477 resistance or wait
for the price to break below the 33854 support to target the 33450 swing low
first and the 32684 support afterwards.
The Dow
Jones is in for a week filled with important events. It all begins with the highly
anticipated US CPI report scheduled for tomorrow. This report is expected to
play a crucial role in shaping the market’s expectations for the upcoming FOMC
rate decision, which is set to take place the following day. Furthermore, later
in the week, there will be another Jobless Claims report and the release of the
University of Michigan consumer sentiment survey. The previous release of this
survey had a significant impact on the market, primarily due to a substantial
increase in long-term inflation expectations.
This article was written by ForexLive at www.forexlive.com.