Yesterday, the Dow Jones remained under pressure as the market continued to reprice the aggressive rate cuts expectations following Fed’s Waller comments. Moreover, the economic data surprised once again to the upside with the US Retail Sales beating expectations across the board and Industrial Production edging up. Overall, the soft-landing narrative is still intact but in the short term the market is readjusting to tighter monetary conditions.
Dow Jones Technical Analysis – Daily Timeframe
On the daily chart, we can see that the Dow Jones fell below the red 21 moving average as the bearish momentum continues to weigh on the market. We can also see that the recent upside price action has been diverging with the MACD which is generally a sign of weakening momentum often followed by pullbacks or reversals. In this case, the target for the pullback should be the 37066 level, while a break below it would confirm a reversal.
Dow Jones Technical Analysis – 4 hour Timeframe
On the 4 hour chart, we can see more clearly the divergence with the MACD and the recent pullback from the all-time high. The buyers should step in around the 37066 level with a defined risk below it to position for another rally into a new all-time high. The sellers, on the other hand, will want to see the price breaking lower to increase the bearish bets into the 36030 level.
Dow Jones Technical Analysis – 1 hour Timeframe
On the 1 hour chart, we can see that we have a resistance zone around the 37400 level where we can also find the red 21 moving average for confluence. If the price were to pull back into that resistance, we can expect the sellers to step in to position for a drop into the 37066 level and target a break below it. The buyers, on the other hand, will want to see the price breaking higher to invalidate the bearish setup and increase the bullish bets into a new all-time high.
Upcoming Events
Today, we will see the latest US Jobless Claims figures, while tomorrow we conclude the week with the University of Michigan Consumer Sentiment survey.