Last Friday, the Dow Jones sold off into the close as we got risk off flows across the board due to news of imminent Iranian retaliation. Over the weekend, Iran launched its operation with drones and missiles against Israel but almost all of them were intercepted and there were no casualties. In the end, Iran said that the operation was deemed concluded and we got reports of general de-escalation with the US telling Israel that it won't support a retaliation. We might see some positive risk sentiment and probably gap up with the economic data being in focus next.
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. Recently, we got a breakout which opened the door for a bigger correction into the 37128 level. The sellers managed to break the first key support level and will now target a break below the second one as well. The buyers, on the other hand, will likely step in here with a defined risk below the level 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 price has been getting rejected by the downward trendline and the blue 8 moving average as the sellers kept leaning on them with a defined risk above the trendline to position for new lows. If we get another pullback, we can expect the sellers to step in around the trendline again to position for a break below the second key support level 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.
Dow Jones Technical Analysis – 1 hour Timeframe
On the 1 hour chart, we can see that besides the trendline and the 8 moving average, the sellers will also find the 61.8% Fibonacci retracement level adding some extra confluence around the 38300 level.
Upcoming Events
This week is a bit empty on the data front with just two notable reports. Today we have the Retail Sales data while on Thursday we get the latest US Jobless Claims figures.
