The Dow Jones surged to new highs following the miss in the US CPI report. Looks like the market is still trading based on the inflation and interest rates expectations and ignoring the softening in the labour market and growth data. Yesterday, the US Retail Sales were more tepid compared to the prior months, but they still came out better than expected, and the US PPI data missed forecasts by a big margin across the board. The bears are having a hard time to fight this positive sentiment and perhaps it will take a clear uptrend in the unemployment rate to switch the market’s focus.
Dow Jones Technical Analysis – Daily Timeframe
On the daily chart, we can see that the Dow Jones surged into the key resistance at 35000 following the miss in the US CPI report. This rally looks a bit overstretched as depicted by the distance from the blue 8 moving average. In such instances, we can generally see a pullback into the moving average or some consolidation before the next move. The sellers are likely to step in around this resistance to position for a drop back into the 34000 level.
Dow Jones Technical Analysis – 4 hour Timeframe
On the 4 hour chart, we can see that in case of a pullback, the buyers might lean on the upward trendline where they will find the blue 8 moving average for confluence. The sellers, on the other hand, will want to see the price breaking below the trendline to increase the bearish bets into the 34000 support.
Dow Jones Technical Analysis – 1 hour Timeframe
On the 1 hour chart, we can see that the price is diverging with the MACD right at the key resistance level. This is generally a sign of weakening momentum often followed by pullbacks or reversals. In this case, it might be another signal for an imminent pullback. Moreover, we can see that the buyers will also find the 38.2% Fibonacci retracement level for confluence around the trendline.
Upcoming Events
Today the market’s focus will be on the latest US Jobless Claims figures given the recent softening in the labour market data.
