Last Friday, the Dow Jones pulled back a bit after reaching a new all-time high following the Nvidia induced rally across different stock markets. On the economic data side, we got another slate of strong data last Thursday with the US Jobless Claims and US PMIs beating expectations. The Fed members continue to repeat that they want to see a couple more of inflation reports before deciding on rate cuts, but they keep on reiterating that cuts are coming this year. Overall, the path of least resistance remains to the upside.
Dow Jones Technical Analysis – Daily Timeframe
On the daily chart, we can see that the Dow Jones extended the rally into a new all-time high last week. We can also notice that the price reacted to the top trendline of what now looks like a rising wedge. Moreover, the price continues to diverge with the MACD which is generally a sign of weakening momentum often followed by pullbacks or reversals. In this case, it should be a signal for a pullback into the bottom trendline where the buyers will have a better risk to reward setup.
Dow Jones Technical Analysis – 4 hour Timeframe
On the 4 hour chart, we can see even better the rising wedge formation and the divergence with the MACD. We can also notice that we have the 50% Fibonacci retracement level around the bottom trendline for extra confluence. That’s where we can expect the buyers to step in with a defined risk below the trendline to position for a rally into another all-time high. The sellers, on the other hand, will want to see the price breaking lower to invalidate the bullish setup and position for a drop into the 38033 level first and upon a further break lower, the 37128 level next.
Dow Jones Technical Analysis – 1 hour Timeframe
On the 1 hour chart, we can see that we have another interesting support zone around the 38900 level where we can find the confluence of the previous resistance now turned support, the 38.2% Fibonacci retracement level and the red 21 moving average. The buyers might want to split their orders as the price could bounce either from the 38900 support or the bottom trendline.
Upcoming Events
This week we have some important economic data on the agenda. We begin tomorrow with the release of the US Consumer Confidence report. On Thursday, we will see the US PCE and the latest US Jobless Claims figures. Finally, on Friday, we conclude the week with the US ISM Manufacturing PMI.
