The Dow Jones managed to hold into the last week gains and consolidated near a key resistance as the first part of the week didn’t offer any meaningful catalysts. The things should change today though as we will see the latest US Jobless Claims data and given the recent weakness in the labour market data, the market is likely to react strongly to this report.
Dow Jones Technical Analysis – Daily Timeframe
On the daily chart, we can see that the Dow Jones erased all the losses of the past couple of weeks and it’s now consolidating around a key resistance where we can find the confluence with the trendline and the 61.8% Fibonacci retracement level. This is where the sellers are likely to pile in to position for a selloff into new lows with a great risk to reward setup.
Dow Jones Technical Analysis – 4 hour Timeframe
On the 4 hour chart, we can see more closely the bearish setup with the key resistance highlighted by the blue box. The price in the first part of the week managed to break the high but erased the gains soon after. The buyers are likely piling in here with a defined risk below the trendline to position for another rally into the 35000 level. A break below the trendline should invalidate the bullish setup and confirm the bearish one.
Dow Jones Technical Analysis – 1 hour Timeframe
On the 1 hour chart, we can see that the recent price action is diverging with the MACD right when we are at a key resistance. This is generally a sign of weakening momentum often followed by pullbacks or reversals. In this case, we got a pullback into the previous higher low, but if the price breaks below it, the reversal would be confirmed, and it would be another bearish confluence for the sellers.
Upcoming Events
Today we have the US Jobless Claims on the agenda, while tomorrow it will be the time for the University of Michigan Consumer Sentiment report. The market is likely to focus on the US Jobless Claims given the recent weakness in the labour market data. Weak figures are likely to weigh on sentiment and push the Dow Jones lower, while good readings might be enough for the market to rally.