Yesterday, the Dow Jones remained on the back foot as the correction that began last week seems to have more room to go. As of now, the data has been overall positive with the US ISM Manufacturing PMI beating expectations and US Job Openings missing forecasts. Moreover, yesterday we got a beat in the US ADP and US Jobless Claims data. If the data remains positive, we can expect the market to bounce back once the froth from the aggressive rate cuts expectations gets unwound. Today, is an important day as we get the release of the US NFP and the US ISM Services PMI.
Dow Jones Technical Analysis – Daily Timeframe
On the daily chart, we can see that the Dow Jones remains in a negative mood amid a general stock market selloff. The level to watch is the support around the 37066 level where we can find the confluence of the recent swing low and the 21 moving average. This is where we can expect the buyers to step in with a defined risk below the support to position for new highs. A break below the support would open the door for a bigger drop into the 36030 level.
Dow Jones Technical Analysis – 4 hour Timeframe
On the 4 hour chart, we can see that the Dow Jones has been trading inside a rising channel but the price recently broke out of it signalling a deeper correction to follow. We can also notice that the latest leg higher diverged with the MACD which is generally a sign of weakening momentum often followed by pullbacks or reversals. If the price breaks below the 37066 level the reversal would be confirmed and the 36030 level will be the next target.
Dow Jones Technical Analysis – 1 hour Timeframe
On the 1 hour chart, we can see more closely the current price action and the divergence with the MACD. Now it’s just about waiting for the price to come into the 37066 support and see what happens there as it’s likely to decide the direction for the next few weeks.