Dow Jones Technical Analysis

Yesterday, the Fed left interest rates unchanged as
expected with basically no change to the policy statement. Fed Chair Powell
repeated once again that they are “proceeding carefully” as the full effects of
the policy tightening have yet to be felt.

There were some expectations for him to hint or
signal something for the December meeting given that the September Dot Plot
showed another rate hike by the end of the year, but Powell instead
said that they “have not made any decisions on future meetings” sparking a
rally in the Dow Jones.

On the data front, yesterday the US Job Openings beat
expectations, but the ISM Manufacturing PMI missed
by a big margin. The market might be taking this as good news for a relief
rally in the short term, but the bulls may want to be careful going forward.

Dow Jones Technical
Analysis – Daily Timeframe

On the daily chart, we can see that the Dow Jones
bounced around a previous swing level and it’s now approaching key resistance levels.
In fact, we can see that the price is near the 61.8% Fibonacci retracement level
and the red 21 moving average.

This is where we can expect the sellers to step in
and further increase the bearish bets if the price reaches the trendline. The
buyers, on the other hand, will want to see the price breaking above the
trendline to invalidate the bearish trend and start eyeing the all-time high.

Dow Jones Technical
Analysis – 4 hour Timeframe

On the 4 hour chart, we can see that we had a divergence with the
MACD right
around the key swing level. This is generally a sign of weakening momentum
often followed by pullbacks or reversals. In this case, since the price broke
above the minor trendline, the reversal got confirmed and the buyers piled in
more aggressively to extend the rally into new highs.

Dow Jones Technical
Analysis – 1 hour Timeframe

On the 1 hour chart, we can see that the
trend on this timeframe is clearly bullish with the price printing higher highs
and higher lows and the moving averages being crossed to the upside. We can
expect this trend to continue as long as the price stays above the trendline and
the red 21 moving average. If the price falls below the trendline, the sellers
should step in and position for a drop into new lows as that could be the
signal that the short term correction has ended.

Upcoming Events

Today, we have only the US Jobless Claims data,
which will be important for the market given the recent weakness in Continuing
Claims. Tomorrow, we conclude the week with the US NFP report and the ISM
Services PMI.

This article was written by FL Contributors at

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