Dow Jones Technical Analysis

Last Friday, the Dow Jones sold off into the close
as we got risk off flows across the board due to news of imminent Iranian
retaliation. Over the weekend, Iran launched its operation with drones and
missiles against Israel but almost all of them were intercepted and there were
no casualties. In the end, Iran said that the operation was deemed concluded
and we got reports of general de-escalation with the US telling Israel that it
won’t support a retaliation. We might see some positive risk sentiment and
probably gap up with the economic data being in focus next.

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 first
key support level
and will now target a break below the second one as well. The buyers, on the
other hand, will likely step in here with a defined risk below the level to
position for a rally into another all-time high.

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 break below the second key
support level 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.

Dow Jones Technical
Analysis – 1 hour Timeframe

On the 1 hour chart, we can see that
besides the trendline and the 8 moving average, the sellers will also find the
61.8% Fibonacci
retracement level adding some extra confluence around
the 38300 level.

Upcoming Events

This week is a bit empty on the data front with just two
notable reports. Today we have the Retail Sales data while on Thursday we get
the latest US Jobless Claims figures.

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