Last week, the Dow Jones finished on a positive note as the lack of bearish catalysts kept the market supported. Today, the futures market opened higher following the good PCE report last Friday when the market was closed for holidays. Therefore, we can expect to see a positive gap at the open. Overall, the path of least resistance remains to the upside with the main two risks for the bullish sentiment being a reacceleration in inflation leading to a hawkish Fed or a hard landing.
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. From a risk management perspective, the buyers will have a much better risk to reward setup around the lower bound of the channel where they will also find the red 21 moving average for confluence. The sellers, on the other hand, will want to see the price breaking lower to position for a drop into new lows with the base of the channel at 37128 being the ultimate target.
Dow Jones Technical Analysis – 4 hour Timeframe
On the 4 hour chart, we can see that the price recently bounced on the previous resistance turned support where we had also the confluence with the red 21 moving average. The buyers stepped in to position for a rally into the upper bound of the channel. The sellers will likely lean on the top trendline to position for a drop back into the bottom trendline targeting a break below it.
Dow Jones Technical Analysis – 1 hour Timeframe
On the 1 hour chart, we can see that the price trades right around the all-time high and we might see the market open higher today as the futures market gapped up at the open following the good PCE report last Friday. Aggressive buyers could pile in immediately to target an extension into the upper bound of the channel and fold as soon as the price falls back below the 39886 level waiting to buy the dip around the lower bound of the channel.
Upcoming Events
This week we get the release of many key economic data. We begin today with the US ISM Manufacturing PMI. Tomorrow, we have the US Job Openings. On Wednesday, we get the US ADP and the US ISM Services PMI data. On Thursday, we will see the latest US Jobless Claims figures, while on Friday we conclude with the US NFP report.
