In terms of technical analysis for the Dow Jones, the NFP and the ISM Services PMI reports on Friday gave the market the ultimate push to break the resistance zone that was keeping the market in a rangebound price action since Christmas holidays.

Moreover, Fed Chair Powell on Tuesday didn’t touch on monetary policy or recent economic data, leaving the market free to move on its own expectations.

The US CPI report on Thursday will be an important event for the market. Another miss should keep the bullish bias intact as the market will expect the Fed to hike by 25 bps and pause earlier than expected.

A beat shouldn’t bode well for the sentiment and raise the odds of another 50 bps hike with the market probably falling going into the February FOMC meeting.

DOW JONES (DJIA) Technical Analysis

In the daily chart above, we can see that the price managed to break up and it’s now testing the old resistance turned support. If the market maintains the bullish bias and the US CPI on Thursday misses expectations, we can expect another bullish run to the upside targeting the resistance zone around the 35000 price level.

In the 1-hour chart above, we can see more closely how the price broke out of the 2 weeks long range after the NFP and ISM Services PMI reports. The price then pulled back to test the resistance now turned support and bounced from it as Fed Chair Powell didn’t offer anything bearish for the market.

Zooming in to the 15 minutes chart, we can see that the recent move to the upside lacks momentum as you can see from the price divergence with the RSI. The price should now pullback again to the support zone and then two different scenarios may play out:

· The price bounces and starts again its bullish run.

· The price breaks down and starts a fall into the US CPI report.