Last Friday, the Dow Jones pulled back as a hot US PPI report weighed on the market. In fact, the Treasury yields rose, and the rate cuts expectations got trimmed some more as fears of stickier inflation started to creeping in. The Fed members though keep on dismissing the latest figures as something expected and continue to repeat that the disinflationary trend remains intact. This suggests that the Fed is not even considering rate hikes and in the worst-case scenario could just delay rate cuts. The market might continue to like this as long as the economic data remains good. Today the market will be closed for the Presidents Day and will resume trading tomorrow.
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 to end up back around the highs. The divergence with the MACD generally signals a weakening momentum which is often followed by pullbacks or reversals. In this case, the targets for the sellers should be the 37777 support and the 37066 swing low. The buyers will need the price to break the all-time high to invalidate the bearish setup and position for even higher highs.
Dow Jones Technical Analysis – 4 hour Timeframe
On the 4 hour chart, we can see that we also had the 50% Fibonacci retracement level for confluence around the daily red 21 moving average. The price is now around the highs, and this is where the sellers are likely to pile in with a defined risk above the all-time high to position for a drop into the 37777 support.
Dow Jones Technical Analysis – 1 hour Timeframe
On the 1 hour chart, we can see that we have a support zone around the 38500 level where we can find the Fibonacci retracement levels and the red 21 moving average. This is where we can expect the buyers to pile in with a defined risk below the zone to position for a 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 37777 level.
Upcoming Events
This week is basically empty on the data front with just the release of the FOMC Meeting Minutes on Wednesday followed by the US Jobless Claims and the US PMIs on Thursday.
