Last week, we got another set of good economic data for the US with signs of further disinflation in the core inflation measures. The soft-landing narrative should be in full swing with resilient labour market, lower inflation, and lower inflation expectations. Nonetheless, the Dow Jones price action remains rangebound, and at this point it might even be because we are getting near to the FOMC rate decision. Looking forward, the uncertainty is very high as we either get a soft or hard landing, but the weakness in other economies like the Eurozone skews the picture to the worse scenario.
Dow Jones Technical Analysis – Daily Timeframe
On the daily chart, we can see that the Dow Jones rallied again into the 35000 resistance but got rejected. The price action between the trendline and the resistance is forming an ascending triangle and a breakout on either side generally leads to a strong and sustained move. Therefore, the best strategy at the moment might be to patiently wait for a breakout.
Dow Jones Technical Analysis – 4 hour Timeframe
On the 4 hour chart, we can see that we also had the probability that this consolidation was forming a symmetrical triangle but the recent failed breakout should suggest that this wasn’t the case here. Nonetheless, this might even be a signal that the bearish momentum is stronger as we got a fakeout, which is generally a reversal pattern.
Dow Jones Technical Analysis – 1 hour Timeframe
On the 1 hour chart, we can see that the price action is choppy and there’s no clear support or resistance level except the 35000 level and the major upward trendline. In fact, if the price falls to the trendline, the buyers should step in with a defined risk below it to position for another rally and target a new high. Alternatively, we should also see the buyers piling in aggressively if the price breaks above the 35000 resistance. The sellers, on the other hand, should do the opposite by leaning on the resistance with a defined risk above it to position for another selloff and pile in even more aggressively if the price breaks below the trendline.
This week has just a couple of important economic releases with the FOMC rate decision on Wednesday being the highlight. The Fed is expected to keep rates unchanged, and the market will focus more on the Dot Plot and Fed Chair Powell’s press conference, although he’s likely to repeat that they remain data dependent. Moving on to Thursday, we will see another US Jobless Claims report, while on Friday we conclude the week with the US PMIs data.