Last week, the Dow Jones didn't move much given the lack of economic events and the Thanksgiving holidays in the final part of the week. The only two important reports were the US Jobless Claims and the US PMIs. The former beat expectations across the board, while the latter came basically in line with forecasts. This week we can expect more action with the holidays in the rear-view mirror and some key economic releases on the agenda.
Dow Jones Technical Analysis – Daily Timeframe
On the daily chart, we can see that the Dow Jones is getting closer to the cycle high at 35680 as this November rally just doesn’t want to let up. The sellers are likely to start looking for a deeper pullback around these levels, but it’s hard to fight such a strong bullish train without a catalyst.
We can notice that the price is 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.
Dow Jones Technical Analysis – 4 hour Timeframe
On the 4 hour chart, we can see that the price has been diverging with the MACD for quite some time now. This is generally a sign of weakening momentum often followed pullbacks or reversals. In this case, it might be a signal that we could indeed see at least a pullback very soon.
Dow Jones Technical Analysis – 1 hour Timeframe
On the 1 hour chart, we can see even better the divergence with the MACD which has been going on since the break above the key resistance around the 34000 level. The buyers are likely to continue to lean on the minor trendline and the red 21 moving average to target the cycle high. The sellers, on the other hand, will want to see the price breaking lower to pile in and target first the low around the 34800 level and upon a further break, the support at 34000.
Upcoming Events
Tomorrow, we have the US Consumer Confidence report. On Thursday, we will see the latest US Jobless Claims figures and the US PCE report. On Friday, we conclude the week with the US ISM Manufacturing PMI which missed expectations by a big margin the last time.