The Dow Jones ended last week on a positive note as we got a strong rally despite some concerning data. The University of Michigan consumer sentiment report missed forecasts across the board by a big margin once again. The bearish signs keep on accumulating with the recent hawkish tone from Fed speakers and the softening labour market data with the big misses in the recent NFP report and the rising Continuing Claims. The buyers should be very careful going forward.
Dow Jones Technical Analysis – Daily Timeframe
On the daily chart, we can see that the Dow Jones last Friday broke above the key trendline and the resistance around the 34100 level. Given that it wasn’t supported by any bullish catalysts, this breakout might turn into a fakeout, so the buyers must be extra careful going forward.
Dow Jones Technical Analysis – 4 hour Timeframe
On the 4 hour chart, we can see more closely the breakout. In case we get a pullback into the broken resistance, the buyers will likely step in with a defined risk below the resistance turned support and target another extension to the upside. The sellers, on the other hand, will want to see the price breaking below the support to confirm the fakeout and pile in for a drop into new lows.
Dow Jones Technical Analysis – 1 hour Timeframe
On the 1 hour chart, we can see that the Friday’s rally is diverging with the MACD which is generally a sign of weakening momentum often followed by pullbacks or reversals. In this case, if we get a pullback, the buyers should pile in around the support, but if the price breaks below it, the reversal would be confirmed, and the sellers will regain control.
Upcoming Events
This week we have some top tier economic releases. We begin tomorrow with the US CPI report which is going to be one of the most important events of the week. On Wednesday, we have the US Retail Sales and PPI data, while on Thursday we conclude with the latest US Jobless Claims figures.
