Dow Jones Technical Analysis

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Yesterday, the Fed kept interest rates
unchanged
as expected but that’s not what the market was looking for going into
the event. The market was focused solely on the Dot Plot and the Fed decided to
validate the market’s dovish pricing projecting a 2024 year-end peak rate at
4.6%. The expectations were for the Fed to keep two rate cuts for 2024, but the
Fed decided to increase that to three, basically agreeing with the market that
rate cuts are coming.

Moreover, Fed Chair Powell didn’t
push back against the strong dovish pricing and even said that they are focused
on not making the mistake of holding rates high for too long, which suggests
that a rate cut could come pretty soon. This gave a strong boost to the Dow
Jones leading to new highs with the sentiment turning heavily bullish.

Dow Jones Technical
Analysis – Daily Timeframe

On the daily chart, we can see that the Dow Jones made
a new all-time high yesterday following the Fed’s pivot. This rally incredible
rally has been a straight line since the end of October with almost no
opportunities to catch a decent pullback. Chasing the price now doesn’t look
like a good idea from a risk management perspective, although the FOMO can be
really strong now.

Dow Jones Technical
Analysis – 4 hour Timeframe

On the 4 hour chart, we can see that we
have a trendline now
connecting the most recent swing lows. If we get a pullback from the all-time
high, the buyers are likely to lean on the trendline where they will also find
the red 21 moving average for confluence.
Moreover, we can see that the latest leg higher is diverging with
the MACD, which
is generally a sign of weakening momentum often followed by pullbacks or
reversals.

Dow Jones Technical
Analysis – 1 hour Timeframe

On the 1 hour chart, we can see that the
price recently broke out of the consolidation marked by the blue box and
extended the rally to new highs. We can also notice that on this timeframe, the
buyers will find the 50% Fibonacci
retracement
level around the trendline and the moving
average for extra confluence. The sellers, on the other hand, will want to see
the price breaking below the trendline to position for a drop into the 35683 support.

Upcoming Events

Today we will see the latest US Retail Sales and
Jobless Claims figures, while tomorrow we conclude the week with the US PMIs.

This article was written by FL Contributors at www.forexlive.com.

Go to Forexlive

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