Yesterday, the Dow Jones ended the day around the highs as the market continues to look through the beat in the US CPI report. As previously mentioned, the path of least resistance looks to be to the upside as long as growth remains pretty much stable, and the Fed doesn’t restart tightening. In the first case, the labour market will need to keep on being resilient, while in the second case, inflation should not start trending higher so much that the Fed is forced to change course.

Dow Jones Technical Analysis – Daily Timeframe

Dow Jones Technical Analysis
Dow Jones Daily

On the daily chart, we can see that the Dow Jones broke out of the rising wedge to the downside recently. This opened the door for a bigger correction into the 38043 level, but the sellers failed to keep the momentum going and the buyers eventually managed to invalidate the setup by pushing the price above the bottom trendline. The bias has turned bullish once again, so we can expect the buyers to pile in now and target a new all-time high.

Dow Jones Technical Analysis – 4 hour Timeframe

Dow Jones Technical Analysis
Dow Jones 4 hour

On the 4 hour chart, we can see that the price managed to break above the downward trendline and the bottom trendline of the wedge. Moreover, the moving averages crossed back to the upside signalling a change in momentum. This is where we can expect the buyers to step in with a defined risk below the downward trendline to position for new highs. The sellers, on the other hand, will want to see the price falling back below the trendlines to position for a drop into the 38043 level.

Dow Jones Technical Analysis – 1 hour Timeframe

Dow Jones Technical Analysis
Dow Jones 1 hour

On the 1 hour chart, we can see more closely the recent price action with the break above the trendline and the retest. We now have a strong support zone around the 38950 level where we can find the confluence with the red 21 moving average, the 38.2% Fibonacci retracement level and the previous swing level. This is where the buyers will look to buy from to target new highs, while the sellers will want to see a break to the downside to position for new lows.

Upcoming Events

Today we get the US PPI, the US Retail Sales and the US Jobless Claims figures. Tomorrow, we conclude the week with the University of Michigan Consumer Sentiment survey.