The recent economic reports have been showing further deterioration in economic activity, all of which have impacted the Dow Jones. This includes the latest US Retail Sales report which kicked some risk off flows. The market is taking such reports as good news because it looks forward to an earlier than expected Fed pivot.
What gives the market further confidence is the moderation in inflation and the strength in labour market. The only problem here is that this “soft landing” scenario is a big consensus call and often times the consensus is wrong. So, this is something to be wary about. Right now, the market is showing some caution ahead of the FOMC meeting next week, but today’s US Jobless Claims data may trigger some interesting moves.
DOW JONES Technical Analysis
In the daily chart above, we can see that the market is still quite choppy with the price trading around the support zone at 33450-33650. It’s been a push and pull between bulls and bears lately as forward-looking economic data keeps deteriorating but the labour market keeps on showing strength.
The support zone is basically a barometer for risk sentiment going forward: stay above it and the bias is bullish and stay below it and the bias turns bearish.
In the 1-hour chart above, we can see that at the moment the price is stuck in a range between 33888 and 33399. Aggressive traders may play the range, selling at the resistance and targeting the support or buying at support and targeting the resistance.
Conservative traders may want to wait for a clear breakout on either side before joining the move. An upside breakout should give the bulls control with a target at 34487. A downside breakout, on the other hand, should give the bears strength to target the next support at 32680.
Zooming in to the 15 minutes chart, we can see more clearly the rangebound price action with the price currently trading at the resistance at 33885. The only major risk event today is the US Jobless Claims report.
Another beat to expectations should give the bulls the momentum to start another rally, but a miss may keep the price trading in the range with a more bearish bias.