Yesterday, the Dow Jones extended the drop into new lows despite a lack of bearish catalysts. In fact, we had pretty much a down day for most markets with selloffs in the US Dollar, Treasury yields and some commodities. On the geopolitical front, not much has changed as the Israeli retaliation continues to be delayed and it’s not even sure if they will strike at all now.
On the macro side, the market has priced out almost all the rate cuts in 2024 as it expects just one cut later in the year. On the data front, we don’t have much to work on in the next couple of weeks except the PCE, which the Fed has already indicated to be slightly higher but mostly unchanged.
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. Recently, we got a breakout which opened the door for a bigger correction into the 37128 level. The sellers managed to break the second key support level and will now target a drop into the third and last one at 37128. The buyers, on the other hand, will need to break the current downward trend to start targeting new highs.
Dow Jones Technical Analysis – 4 hour Timeframe
On the 4 hour chart, we can see that the price has been getting rejected by the downward trendline and the blue 8 moving average as the sellers kept leaning on them with a defined risk above the trendline to position for new lows. If we get another pullback, we can expect the sellers to step in around the trendline again to position for a drop into the third key 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 that all the rallies have been faded as the sellers kept on piling in around the trendline as they continue to target the 37128 support. We can notice that we are starting to see a divergence with the MACD which is signalling a weakening bearish momentum. The price action might also form a descending triangle so a break on either side will likely trigger a sustained move.
Upcoming Events
Today we get the latest US Jobless Claims figures.
