Israel hasn’t spread to other Arab countries. In fact, yesterday the US intelligence has even reported that
Iran was surprised by the Hamas attack. This has weighed on Crude Oil prices
and eliminated the risk of a much bigger spike. Moreover, the US PPI report
yesterday beat expectations, but it was mainly energy driven and the market
brushed it aside as we got a big drop in Oil prices in October and even Fed’s Waller sounded
like a rate hike in November is not coming unless we get a very ugly CPI
report.
Dow Jones Technical
Analysis – Daily Timeframe
On the daily chart, we can see that the Dow Jones
has now erased almost half of the losses seen in the prior month as the market
continues to charge higher targeting the key resistance zone
around the 34000 level. That’s where we are likely to see the sellers coming
into the market with more conviction as they will have a better risk to reward
setup to position for another drop into the lows.
Dow Jones Technical
Analysis – 4 hour Timeframe
On the 4 hour chart, we can see that the break
above the minor downward trendline saw even
more buyers coming into the market as a key barrier got taken out. There’s now
a minor resistance defined by the previous swing high around the 33893 level,
but at this point we should see the price getting into the 34000 resistance
zone before seeing more bearish pressure coming into the market.
Dow Jones Technical
Analysis – 1 hour Timeframe
On the 1 hour chart, we can see that the divergence with
the MACD
signalled a loss of bearish momentum and led to a reversal after the break of
the minor trendline. The buyers yesterday leant on the red 21 moving average to
position for another bullish impulse into the 34000 resistance. A break of the
most recent high might see more buyers piling into the market but we are now
near the sellers’ area, so we are likely to see the bullish momentum weakening
and the MACD could be helpful to time the reversal. An ugly CPI report today
might already be enough for the sellers to reverse this entire rally.
Upcoming Events
Today we will get the most important report of the
week, that is the US CPI report. The market is likely to focus on the core
measures and react positively to lower than 0.4% monthly rate readings. At the
same time, we will also see the latest US Jobless Claims data which is an
important labour market report. Tomorrow, we conclude the week with the
University of Michigan Consumer Sentiment report.
This article was written by FL Contributors at www.forexlive.com.