Friday, the Dow Jones pulled back a bit after reaching a new all-time high
following the Nvidia induced rally across different stock markets. On the
economic data side, we got another slate of strong data last Thursday with the US
Jobless Claims and US PMIs beating
expectations. The Fed members continue to repeat that they want to see a couple
more of inflation reports before deciding on rate cuts, but they keep on
reiterating that cuts are coming this year. Overall, the path of least
resistance remains to the upside.
Dow Jones Technical
Analysis – Daily Timeframe
On the daily chart, we can see that the Dow Jones
extended the rally into a new all-time high last week. We can also notice that
the price reacted to the top trendline of what
now looks like a rising wedge.
Moreover, the price continues to diverge with the
MACD which is
generally a sign of weakening momentum often followed by pullbacks or
reversals. In this case, it should be a signal for a pullback into the bottom
trendline where the buyers will have a better risk to reward setup.
Dow Jones Technical
Analysis – 4 hour Timeframe
On the 4 hour chart, we can see even
better the rising wedge formation and the divergence with the MACD. We can also
notice that we have the 50% Fibonacci
retracement level around the bottom trendline for
extra confluence.
That’s where we can expect the buyers to step in with a defined risk below the
trendline 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 invalidate the
bullish setup and position for a drop into the 38033 level first and upon a
further break lower, the 37128 level next.
Dow Jones Technical
Analysis – 1 hour Timeframe
On the 1 hour chart, we can see that we have
another interesting support zone
around the 38900 level where we can find the confluence of the previous resistance now
turned support, the 38.2% Fibonacci retracement level
and the red 21 moving average. The buyers might want to split their orders as
the price could bounce either from the 38900 support or the bottom trendline.
Upcoming Events
This week we have some important economic data on the
agenda. We begin tomorrow with the release of the US Consumer Confidence
report. On Thursday, we will see the US PCE and the latest US Jobless Claims
figures. Finally, on Friday, we conclude the week with the US ISM Manufacturing
PMI.
This article was written by FL Contributors at www.forexlive.com.