Dow Jones Technical Analysis

Yesterday, the Dow Jones dropped following the big
beat in the US PMIs as the
rise in Treasury yields weighed on the market. The data was still in support of
the soft-landing narrative with the commentary in the PMI report citing fastest
output growth in seven months and sharp cooling in inflation. Given the
resilience of the labour market and consumer spending, the rate cuts continue
to be pushed back a little, but as long as the disinflationary trend remains
intact, we can expect the Fed to proceed with the “insurance” cuts anyway.

Dow Jones Technical
Analysis – Daily Timeframe

On the daily chart, we can see that the Dow Jones yesterday
fell into the close with the price now standing right around the previous high
and the blue 8 moving average. This is
where we can expect the buyers to step in with a defined risk below the level
to position for a rally into another all-time high. The sellers, on the other
hand, will want to see the price breaking lower to target a bigger correction
into the 37066 level.

Dow Jones Technical
Analysis – 4 hour Timeframe

On the 4 hour chart, we can see that we
have a good support zone around the previous high as there’s also the confluence with
the 38.2% Fibonacci
level and the moving averages. A break
below the support should give the sellers even more conviction for a drop into
the 37066 level.

Dow Jones Technical
Analysis – 1 hour Timeframe

On the 1 hour chart, we can see that the
recent price action formed what looks like a double top with
the support zone around the previous high being the neckline. What happens
around this level will likely decide where the price will go in the next few
weeks. A bounce should lead to a rally while a breakout is likely to trigger a
selloff into the 37066 level.

Upcoming Events

Today we will see the Advance US Q4 GDP and the
latest US Jobless Claims figures. Tomorrow, we conclude the week with the US
PCE report.

This article was written by FL Contributors at

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