Yesterday, the Dow Jones had a negative day as the US ADP data missed expectations which might have weighed on the sentiment heading into the NFP report tomorrow. There might also be a general profit taking ahead of the NFP data and the FOMC rate decision next week as the market might want some new strong catalyst to make new highs. In the bigger picture, the market generally peaks when the labour market weakens, and the unemployment rate starts to rise steadily, so the bulls should be very careful heading into the 2024.
Dow Jones Technical Analysis – Daily Timeframe
On the daily chart, we can see that the Dow Jones didn’t do much in the first half of week as it got stuck in a consolidation. Yesterday we got a negative day as the miss in the US ADP might have weighed on the sentiment heading into the NFP tomorrow. In case we get a pullback from here, the buyers should lean on the previous cycle high at 35683, while the sellers will want to see the price breaking lower to pile in and extend the drop into the 34150 support.
Dow Jones Technical Analysis – 4 hour Timeframe
On the 4 hour chart, we can see that on this timeframe the buyers will also find the red 21 moving average for confluence around the previous cycle high. This should make the level even more important as a break lower will increase the chances of a selloff into the 34150 support, which is also going to be the last line of defence for the buyers.
Dow Jones Technical Analysis – 1 hour Timeframe
On the 1 hour chart, we can see the consolidation highlighted by the blue box. A break to the upside is likely to lead to an extension into the all-time high at 36944, while a break to the downside will give us the pullback into the key 35683 level. We can also notice that the Dow Jones has been diverging with the MACD since the break above the 34150 resistance. This is generally a sign of weakening momentum often followed by pullbacks or reversals, so the buyers should be extra careful going forward, especially given the weakening labour market.
Upcoming Events
Today we get the latest US Jobless Claims figures where the market will want to see how fast the US labour market is weakening. Tomorrow, we conclude the week with the US NFP report which is going to be a big market moving event.
