Yesterday, the Fed left interest rates unchanged as expected with basically no change to the statement. The market was fearing some hawkish stuff, but we didn’t get any. In fact, the Dot Plot showed still three rate cuts for this year and the economic projections were all upgraded with growth and inflation higher and the unemployment rate lower. Moreover, during the press conference, Fed Chair Powell didn’t sound hawkish, on the contrary, he was fairly neutral. This gave the Dow Jones the green light for a rally as the risk sentiment turned very bullish.
Dow Jones Technical Analysis – Daily Timeframe
On the daily chart, we can see that the Dow Jones surged to a new all-time high following the Fed decision. This is a buyers’ market, so the sellers should refrain from taking new positions until we get a change in the risk sentiment and some key breakouts on the lower timeframes. We can also notice that 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 telling that the buyers should buy the higher lows instead of FOMOing at higher highs.
Dow Jones Technical Analysis – 4 hour Timeframe
On the 4 hour chart, we can see that the price broke through the 39119 resistance and triggered a strong bullish reaction as the buyers piled in aggressively for a new all-time high. From a risk management perspective, the buyers will have a much better risk to reward setup around the resistance now turned support where there’s also the 38.2% Fibonacci retracement level for confluence. The sellers, on the other hand, will want to see the price breaking lower to position for a drop into the 38464 level.
Dow Jones Technical Analysis – 1 hour Timeframe
On the 1 hour chart, we can see that we also have a minor trendline around the support zone where the buyers will likely lean onto to position for new highs with a better risk to reward setup. The sellers, on the other hand, will want to see the price breaking lower to position for a drop into the 39464 level.
Upcoming Events
Today we will get some key economic data as we will see the latest US Jobless Claims figures and the US PMIs.
