Last week, the Dow Jones closed around the highs as the market continued to trade on the soft-landing narrative. In fact, despite the slightly higher than expected US CPI figures, the US Jobless Claims improved further and the US PPI data missed forecasts. Moreover, the Fedspeak has been generally neutral with no strong pushback against the market's rate cuts expectations. Today, the market will be closed for MLK Day, but we will have some important events throughout the week.
Dow Jones Technical Analysis – Daily Timeframe
On the daily chart, we can see that the Dow Jones recently bounced on the red 21 moving average and managed to print a new all-time high. The sellers stepped in to position for a correction into the 37066 level, but they will need a break below the moving average to further increase their bearish bets. The buyers, on the other hand, are likely to lean again on the moving average 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 trendline that’s been defining the uptrend since last November got breached recently. We can also notice that the price is diverging even more with the MACD after posting a new all-time high last week. This is generally a sign of weakening momentum often followed by pullbacks or reversals. In this case, it might be another bearish confluence for the sellers.
Dow Jones Technical Analysis – 1 hour Timeframe
On the 1 hour chart, we can see more closely the current price action and the divergence with the MACD. We can also notice that the price had a hard time breaking above the 37777 high with multiple rejections and eventually a pullback. The sellers will want to see the price breaking below the swing low around the 37425 level to increase the bearish bets, while the buyers will likely lean on the swing low level to try another breakout.
Upcoming Events
Tomorrow, all eyes will be on Fed's Waller as the market will be eager to see if he decides to pushback against the aggressive rate cuts expectations. On Wednesday, we will get the US Retail Sales report while on Thursday we will see the latest US Jobless Claims figures. Finally, on Friday, we conclude the week with the University of Michigan Consumer Sentiment survey.
