Dow Jones Technical Analysis

Last Friday, the Dow Jones extended the pullback
from the highs reached after a strong rally triggered by the FOMC decision. This
might have been just a profit-taking move from overstretched levels as nothing
has changed in the data as we got strong US Jobless Claims figures
and good US PMIs. Looking
ahead, we are approaching a new month where we get the key economic data
including the US CPI. The path of least resistance though remains to the upside
until the labour market cracks or the reacceleration in inflation gets
confirmed and we get some hawkish repricing in interest rates expectations.

Dow Jones Technical
Analysis – Daily Timeframe

On the daily chart, we can see that the Dow Jones is
trading inside a rising channel and continues to diverge with the
MACD, which
is generally a sign of weakening momentum often followed by pullbacks or
reversals. In this case, it should be a signal for a pullback into the lower
bound of the channel where we will also find the red 21 moving average for confluence.

Dow Jones Technical
Analysis – 4 hour Timeframe

On the 4 hour chart, we can see that from
a risk management perspective, the buyers will have a much better risk to
reward setup around the lower bound of the channel where we can find the
confluence of the 61.8% Fibonacci
retracement level and the daily 21 moving average. The
sellers, on the other hand, will want to see the price breaking lower to confirm
the reversal and position for a bigger correction into the base of the channel
at 37128.

Dow Jones Technical
Analysis – 1 hour Timeframe

On the 1 hour chart, we can see that we have
a minor support zone
around the 39450 level where we can find the confluence of the red 21 moving
average, the trendline and the 50% Fibonacci retracement level. This is where
the buyers are likely to step in with a defined risk below the support zone to
position for a rally into a new all-time high. The sellers, on the other hand,
will want to see the price breaking lower to position for a drop into the lower
bound of the channel.

Upcoming Events

This week is going to be shortened by the US Holiday on
Friday. Tomorrow, we have the US Durable Goods and Consumer Confidence reports.
On Wednesday we have Fed’s Waller speaking. On Thursday, we get the latest US
Jobless Claims figures, while on Friday we conclude with the US PCE report and
Fed Chair Powell.

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