Last week, we got comments from several Fed members as the blackout period concluded following the FOMC meeting. The prevailing sentiment remains the same as they are awaiting more economic data to determine the extent of further rate increases. While the majority anticipates two additional rate hikes this year, they consistently emphasize that these decision hinge on the data.
Recent data trends may suggest an inclination towards a rate hike. The housing market data surprised to the upside, US Jobless Claims remained steady, and the US Services PMI beat forecasts. Naturally, the upcoming NFP and CPI reports will heavily influence the situation. However, if we keep getting good data, it is likely that the Fed will raise rates in July, aligning with the current market expectations.
Dow Jones Technical Analysis – Daily Timeframe
On the daily chart, we can see that the failed breakout of the 34477 resistance is leading to a big pullback in the Dow Jones. The price has now fell into the red 21 moving average where we may find some buyers leaning on it as they also have support from a previous swing high level at 33892.
Dow Jones Technical Analysis – 4 hour Timeframe
On the 4 hour chart, we can see that we have a downtrend as the moving averages are crossed to the downside and the price keeps printing lower lows and lower highs. The rally into the 34477 resistance was diverging with the MACD which is generally a sign of weakening momentum often followed by pullbacks or reversals.
In this case, we may expect the price to come all the way back to the base of the divergence at 33448 where we can also find the 61.8% Fibonacci retracement level. This will be a strong support zone for the buyers and a break lower would see the sellers pile in more aggressively.
Dow Jones Technical Analysis – 1 hour Timeframe
On the 1 hour chart, we can see that at the moment the price is respecting the trendline as the sellers keep leaning on it on every pullback. The target for the sellers should be the 33448 support with a break lower opening the door for a fall into the 32684 level. The buyers, on the other hand, may start to pile in if the price breaks above the trendline and makes a new higher high, ultimately targeting a breakout of the 34477 resistance.
The data calendar for this week is even emptier compared to the previous one, featuring only the US Jobless Claims and the US PCE reports towards the week's end. Despite this, we will get further comments from many Fed members. However, since no significant economic indicator has been released yet, it is unlikely that they will signal the next course of action at this point.