Friday, the Dow Jones diverged with the other major indices as the market
finished the day negative. Overall, the path of least resistance remains to the
upside given the pickup in economic data with even the leading indicators
turning around. There are still risks on the inflation front though, but the
market looks confident that even if we see some short-term reacceleration, the
Fed will just keep rates steady and if the economy is able to support them,
then it might be even better. Nonetheless, a hot CPI report could provide a
pullback, so that would be something to watch out for.
Dow Jones Technical
Analysis – Daily Timeframe
On the
daily chart, we can see that the Dow Jones is now at a key trendline, and
this is where we can expect the buyers to step in with a defined risk below the
trendline to position for new highs. The sellers, on the other hand, will want
to see the price breaking lower to invalidate the bullish setup and position
for a pullback into the 37777 support.
Dow Jones Technical
Analysis – 4 hour Timeframe
On the 4 hour chart, we can see that
the price has been breaking resistances and retesting them before going up in a
perfect textbook manner. We can also notice that the price is now retesting one
of those resistances now
turned support where we can also find the red 21 moving average for confluence. This
is where we will likely find the buyers bidding up the price while the sellers
will want to wait for a break to the downside to confirm the pullback into the
37777 support.
Dow Jones Technical
Analysis – 1 hour Timeframe
On the 1 hour chart, we can see more
closely the recent price action with the Dow Jones consolidating between the
38550 support and the 38800 resistance. This looks like a market primed for a
big move as soon as we get a breakout on either side.
Upcoming Events
This week is relatively light on the data front with the
US CPI report being the main highlight. We start tomorrow with the release of
the US CPI where the market will want to see if there are indeed signs of a
reacceleration or not. On Thursday, we will get the latest US Jobless Claims
figures, while on Friday we conclude the week with the US PPI and the
University of Michigan Consumer Sentiment survey.
This article was written by FL Contributors at www.forexlive.com.