Last Friday, the Dow Jones surged into another all-time high following the strong University of Michigan Consumer Sentiment report as the market continues to see a goldilocks economy. In fact, the US Jobless Claims have been improving and Retail Sales surprised to the upside. Moreover, we have the US PCE data on Friday where we will likely see another soft figure. On the other hand, the strong economic data is making the market to price out the rate cuts, which might eventually dent the economic and the stock market performance.
Dow Jones Technical Analysis – Daily Timeframe
On the daily chart, we can see that the Dow Jones last Friday made yet another all-time high following the solid consumer sentiment report. We can notice though that the price is diverging strongly with the MACD which is generally a sign of weakening momentum often followed by pullbacks or reversals. In this case, we might get a fakeout and a drop back into the support around the 37066 level which would give the buyers a better risk to reward setup.
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 rally from the 37066 support zone. We can see 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 – 1 hour Timeframe
On the 1 hour chart, we can see that there’s not much where the buyers can lean onto given that we are in unexplored territory. More aggressive buyers might want to step in as soon as the price pulls back into the previous highs around the 37777 level. More conservative buyers will want to see the price pulling back all the way to the 37450 level where they will find the confluence from the red 21 moving average and the 61.8% Fibonacci retracement level. The sellers, on the other hand, will likely pile in at every break lower targeting a break below the 37066 support.
Upcoming Events
This week is a bit more tranquil on the data front with the major releases scheduled for the final part of the week. We begin on Wednesday with the US PMIs while on Thursday we will see the Advance US Q4 GDP and the latest US Jobless Claims figures. Finally, on Friday we conclude the week with the US PCE report.
