Last Friday, the Dow Jones finished the day positive as the US PCE report came mostly in line with expectations. The market has already priced out almost all the rate cuts that were expected at the beginning of the year and it’s now expecting just one in September or December. This means that we will need more worrying data to start pricing in a rate hike and put more downward pressure on the market. For now, the dip-buyers are again in control as we continue to erase the losses from the beginning of the month.
Dow Jones Technical Analysis – Daily Timeframe
On the daily chart, we can see that the Dow Jones got rejected from the key resistance level at 38464 where we had also the confluence of the 38.2% Fibonacci retracement level and the red 21 moving average. This is where the sellers stepped in with a defined risk above the resistance to position for a drop into the 37128 level. The buyers piled in around the recent lows and managed to erase most of the drop from the resistance. The price will need to break above the strong 38464 resistance to invalidate the bearish setup and open the door for a rally into a new all-time high.
Dow Jones Technical Analysis – 4 hour Timeframe
On the 4 hour chart, we can see more clearly the recent price action with the bounce around the lows as the market faded the drop on the US GDP and PCE data. We might get stuck in range here between the 38464 resistance and the 37700 support, so the market participants will be watching carefully where the price is going to break out to in the next days.
Dow Jones Technical Analysis – 1 hour Timeframe
On the 1 hour chart, we can see that we have another interesting zone around the 38000 level where we got several rejections from in the past. If the price were to break below that zone, the sellers will likely pile in already to position for a drop below the support with a better risk to reward setup.
Upcoming Events
Tomorrow, we have the US Q1 Employment Cost Index and the Consumer Confidence report. On Wednesday, we get the US ADP, the ISM Manufacturing PMI, the Job Openings and the FOMC rate decision. On Thursday, we will see the latest US Jobless Claims figures. On Friday, we conclude the week with the US NFP and ISM Services PMI.
