Yesterday, the Dow Jones continued to rise erasing almost all the losses from the hot US CPI release. It looks like the market can look through some higher-than-expected inflation prints as long as growth remains stable, and the Fed doesn’t embark on another tightening process. Therefore, it might be better to focus more on growth related data rather than inflation figures unless there’s a serious reacceleration in inflation that forces the Fed to reverse course and hike rates again.
Dow Jones Technical Analysis – Daily Timeframe
On the daily chart, we can see that the Dow Jones broke below the trendline and bounced on the red 21 moving average. The breakout opened the door for a fall into the 37777 support but the price will need to break below the moving average to confirm that. In case, we get another dip and reach the support, the buyers will likely step in to position for a rally back into all-time highs. The sellers, on the other hand, will want to see the price breaking further lower to start targeting the 37066 level.
Dow Jones Technical Analysis – 4 hour Timeframe
On the 4 hour chart, we can see that the price has pulled back into a strong resistance zone around the 38500 level where we can find the confluence with the red 21 moving average and the 50% Fibonacci retracement level. This is where the sellers will likely step in with a defined risk above the moving average to position for a drop into the 37777 support. The buyers, on the other hand, will want to see the price breaking higher to invalidate the bearish setup and position for a rally into a new all-time high.
Dow Jones Technical Analysis – 1 hour Timeframe
On the 1 hour chart, we can see more closely the bearish setup around the 50% Fibonacci retracement level and the red 21 moving average. If the price were to break below the black counter-trendline, the sellers will increase the bearish bets as that would be a confirmation for a move lower.
Upcoming Events
Today we will see the latest US Jobless Claims figures and the US Retail Sales data, while tomorrow we conclude the week with the US PPI and the University of Michigan Consumer Sentiment survey.
