Last Friday, the Dow Jones diverged with the other major indices as the market finished the day negative. Overall, the path of least resistance remains to the upside given the pickup in economic data with even the leading indicators turning around. There are still risks on the inflation front though, but the market looks confident that even if we see some short-term reacceleration, the Fed will just keep rates steady and if the economy is able to support them, then it might be even better. Nonetheless, a hot CPI report could provide a pullback, so that would be something to watch out for.
Dow Jones Technical Analysis – Daily Timeframe
On the daily chart, we can see that the Dow Jones is now at a key trendline, and this is where we can expect the buyers to step in with a defined risk below the trendline to position for new highs. The sellers, on the other hand, will want to see the price breaking lower to invalidate the bullish setup and position for a pullback into the 37777 support.
Dow Jones Technical Analysis – 4 hour Timeframe
On the 4 hour chart, we can see that the price has been breaking resistances and retesting them before going up in a perfect textbook manner. We can also notice that the price is now retesting one of those resistances now turned support where we can also find the red 21 moving average for confluence. This is where we will likely find the buyers bidding up the price while the sellers will want to wait for a break to the downside to confirm the pullback into the 37777 support.
Dow Jones Technical Analysis – 1 hour Timeframe
On the 1 hour chart, we can see more closely the recent price action with the Dow Jones consolidating between the 38550 support and the 38800 resistance. This looks like a market primed for a big move as soon as we get a breakout on either side.
This week is relatively light on the data front with the US CPI report being the main highlight. We start tomorrow with the release of the US CPI where the market will want to see if there are indeed signs of a reacceleration or not. On Thursday, we will get the latest US Jobless Claims figures, while on Friday we conclude the week with the US PPI and the University of Michigan Consumer Sentiment survey.