Last Friday, the NFP report massively beat forecasts with 336K jobs added against 170K expected. The unemployment rate remained unchanged at 3.8% and average hourly earnings were a touch lower. Overall, the market viewed it as a good release with the soft-landing narrative prevailing. Over the weekend, Hamas launched a big attack against Israel which might cause some risk aversion in the markets, although it's likely to be short-lived as long as the conflict remains in the Levant.
Dow Jones Technical Analysis – Daily Timeframe
On the daily chart, we can see that the Dow Jones rallied last Friday following the strong NFP report before pulling back a bit into the close. The buyers might now be eyeing the resistance around the 34000 level where we can find the confluence with the trendline, the 61.8% Fibonacci retracement level and the red 21 moving average. That will be a strong level where the sellers will be leaning on to position for another selloff into new lows.
Dow Jones Technical Analysis – 4 hour Timeframe
On the 4 hour chart, we can see that the price broke out of the downward trendline and the minor resistance around the 33258 defined by the 38.2% Fibonacci retracement level. We might see this resistance becoming support now with the buyers leaning on it to position for another rally into the 34000 resistance.
Dow Jones Technical Analysis – 1 hour Timeframe
On the 1 hour chart, we can see that the divergence with the MACD was signalling a loss of bearish momentum which is often followed by pullbacks or reversals. The break of the trendline should point to a reversal and the target should be the 34000 resistance. The support zone around the 32258 level will be key now as a bounce should point to further upside, while a break lower is likely to give back control to the sellers and lead to another drop into the 32600 level.
Upcoming Events
This week we have some important inflation reports. On Wednesday, we will get the US PPI data and later in the day the FOMC Meeting Minutes. On Thursday, it will be the time for the main release of the week, that is the US CPI report, and at the same time we will see the latest Jobless Claims figures. Finally, on Friday we will get the University of Michigan Consumer Sentiment report.
