Last Friday the US NFP report missed expectations for the first time after 14 consecutive beats. The miss was very slight though and the other details in the report were good, so in the end it showed that the labour market is still solid even though there may be some minor softening. The market rallied initially but eventually sold off into the close as the US CPI started to be the next focus. The jobs data on Friday hasn’t changed the market pricing for the upcoming FOMC meeting as the market still expects the Fed to hike by 25 bps. The data on Wednesday will decide the next big move for the market.
Dow Jones Technical Analysis – Daily Timeframe
On the daily chart, we can see that the Dow Jones couldn’t sustain the breakout above the 34477 resistance again and eventually sold off into a previous support. The price has also fell below the red 21 moving average and the moving averages have crossed to the downside. This is a bearish signal, and the target should now be the support at 32684.
Dow Jones Technical Analysis – 4 hour Timeframe
On the 4 hour chart, we can see that the price is now at the previous support level at 33885 where we can expect at least a bounce into the red 21 moving average where the sellers are going to step in again. If the price keeps falling below the support though, the sellers should pile in even more aggressively as the bearish momentum would be high at that point and lead to a selloff into the 33448 support where we can also find the 61.8% Fibonacci retracement level.
Dow Jones Technical Analysis – 1 hour Timeframe
On the 1 hour chart, we can see that the price is now diverging with the MACD right at the support level. This is generally a sign of weakening momentum often followed by pullbacks or reversals. In this case, if we get a pullback, the price is likely to rally towards the previous swing high level at 34200 where we can also find the 38.2% Fibonacci retracement level for confluence.
That’s where we can expect the sellers piling in to position for more downside with a defined risk above the resistance zone. The buyers, on the other hand, can either enter here at the support level with a defined risk below the support or wait for the price to take out the swing high level to pile in and extend the rally towards the previous high at 34700.
Upcoming Events
This week everyone will be focused on the US CPI report scheduled for Wednesday as it will likely decide the next big move for the market. A miss in the data, especially on the core figures, should lead to a rally in the Dow Jones, while a beat should weigh on risk sentiment and bring the market even lower. After Wednesday, we will have the US Jobless Claims report on Thursday and the University of Michigan Consumer Sentiment survey on Friday.