following the US NFP report.
There was something for everyone. In fact, for the buyers, the payrolls number
beat expectations while the average hourly earnings missed. For the sellers,
the unemployment rate jumped to 3.9% and the household survey showed a third
consecutive month of job losses. In this case, the technicals should help in
determining the next move for the market as we break some key levels.
Dow Jones Technical
Analysis – Daily Timeframe
On the daily chart, we can see that the Dow Jones broke
out of the rising wedge to the
downside and the buyers failed to rally back above the bottom trendline. This
has opened the door for a bigger correction into the 38043 level first and upon
a further break lower, the 37128 level. The sellers will now pile in with more
conviction to position for the drop into new lows. The buyers, on the other
hand, will want to see the price reversing and rising back above the bottom trendline
to invalidate the bearish setup and target new highs.
Dow Jones Technical
Analysis – 4 hour Timeframe
On the 4 hour chart, we can see that
the price has been diverging with
the MACD for a
long time. This is generally a sign of weakening momentum often followed by
pullbacks or reversals. In this case, given the break of the wedge, we could be
in front of a reversal. We can see that the price recently got rejected from
the resistance formed
by the downward minor trendline and the red 21 moving average.
That’s where the sellers stepped in with a defined risk above the trendline to
position for a drop into the 38043 level.
Dow Jones Technical
Analysis – 1 hour Timeframe
On the 1 hour chart, we can see more
closely the recent price action with the rejection from the downward trendline.
The sellers are now in control and a break below the swing low at 38570 should
trigger a stronger selloff as the sellers will increase the bearish bets into
new lows. The buyers should wait for the price to reach the 38043 level to buy
the dip with a better risk to reward setup or wait for the price to break above
the downward trendline to invalidate the bearish setup and position for new
highs.
Upcoming Events
Tomorrow we have the main event of the week, that is
the US CPI report. On Thursday we get the US PPI, the US Retail Sales and the
US Jobless Claims figures. On Friday, we conclude the week with the University
of Michigan Consumer Sentiment survey.
This article was written by FL Contributors at www.forexlive.com.