Last week, the Dow Jones got under pressure amid geopolitical fears and a general risk off sentiment. The latest developments saw Israel retaliating against Iran but the latter downplaying the airstrikes. This episode might be behind our backs, although it’s worth to keep an eye on it if it were to become a concern again. On the macro side, the Fedspeak turned more hawkish, especially in the latter part of the week as the inflation progress looks to be stalled. Overall, the last week had plenty of bearish catalysts weighing on the market, so we will probably need some positive data on the inflation front this week to turn the sentiment around.
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 got stuck in a consolidation just beneath the second key level. We also got a break above the downward trendline which might be an early signal for a bigger pullback. The buyers will need the price to break above the 38043 level to increase the chances for a bullish move and position for a rally into the 38464 resistance. The sellers, on the other hand, will likely step in around the 38043 level with a defined risk above it to position for a drop into the 37128 support.
Dow Jones Technical Analysis – 1 hour Timeframe
On the 1 hour chart, we can see more clearly the resistance zone around the 38043 level with several rejections from it. The moving averages on this timeframe have crossed to the upside and we have a divergence with the MACD, which could be another early signal for a bullish move into the 38464 resistance. If the price were to break higher and reach the 38464 zone, we can expect the sellers to pile in more aggressively there as they will have an even better risk to reward setup to target a drop into the 37128 support. The buyers, on the other hand, will want to see the price breaking higher to increase the bullish bets into a new all-time high.
Upcoming Events
This week is a bit empty on the data front with just a few notable releases. We begin tomorrow with the US PMIs. On Thursday, we get the US Q1 GDP and the latest US Jobless Claims figures. On Friday, we conclude the week with the US PCE report.
