Last Friday, the Dow Jones ended the day positive following the US NFP report. In fact, the data beat expectations across the board showing once again that the labour market remains resilient without too much inflationary pressure as wage growth continues to ease. The focus will now switch towards the US CPI data on Wednesday as a hot report could change the Fed's strategy in the near term and delay the rate cuts further.
Dow Jones Technical Analysis – Daily Timeframe
On the daily chart, we can see that the Dow Jones has been trading inside a rising channel and continued to diverge with the MACD for a long time. This is generally a sign of weakening momentum often followed by pullbacks or reversals. Last week, we got a breakout which opened the door for a bigger correction into the 37128 level. The price bounced on the first support level at 38464 following the goldilocks NFP report, but it’s the US CPI that will decide whether that was just a dead cat bounce or a reversal.
Dow Jones Technical Analysis – 4 hour Timeframe
On the 4 hour chart, we can see more closely the recent breakout and the bounce around the 38464 support. The price was anyway a bit overstretched around the support 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 we have a downward trendline where we can also find the confluence with the red 21 moving average and the Fibonacci retracement levels. This is where we can expect the sellers to step in with a defined risk above the trendline to position for a break below the 38464 support with a better risk to reward setup. The buyers, on the other hand, will want to see the price breaking higher to invalidate the bearish setup and increase the bullish bets into a new all-time high.
Upcoming Events
This week is going to be a bit more tranquil on the data front with the US CPI being the main highlight. On Wednesday, we have the US CPI report which will likely decide if the Fed is going to delay rate cuts further. On Thursday, we get the US PPI and the latest US Jobless Claims figures. Finally, on Friday we conclude the week with the University of Michigan Consumer Sentiment survey.
