Dow Jones Technical Analysis

Last Friday, the Dow Jones ended the day positive
following the US NFP report.
In fact, the data beat expectations across the board showing once again that
the labour market remains resilient without too much inflationary pressure as
wage growth continues to ease. The focus will now switch towards the US CPI
data on Wednesday as a hot report could change the Fed’s strategy in the near
term and delay the rate cuts further.

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. Last week, we got a breakout which opened the door for
a bigger correction into the 37128 level. The price bounced on the first support level at
38464 following the goldilocks NFP report, but it’s the US CPI that will decide
whether that was just a dead cat bounce or a reversal.

Dow Jones Technical
Analysis – 4 hour Timeframe

On the 4
hour chart, we
can see more closely the recent breakout and the bounce around the 38464
support. The price was anyway a bit overstretched around the support as
depicted by the distance from the blue 8 moving average. In
such instances, we can generally see a pullback into the moving average or some
consolidation before the next move.

Dow Jones Technical
Analysis – 1 hour Timeframe

On the 1 hour chart, we can see that we
have a downward trendline where
we can also find the confluence with
the red 21 moving average and the Fibonacci
retracement levels. This is where we can expect the
sellers to step in with a defined risk above the trendline to position for a
break below the 38464 support 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.

Upcoming Events

This week is going to be a bit more tranquil on the data
front with the US CPI being the main highlight. On Wednesday, we have the US
CPI report which will likely decide if the Fed is going to delay rate cuts
further. On Thursday, we get the US PPI and the latest US Jobless Claims
figures. Finally, on Friday we conclude the week with the University of Michigan
Consumer Sentiment survey.

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