Dow Jones Technical Analysis

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.

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This article was written by FL Contributors at www.forexlive.com.