Dow Jones Technical Analysis

  • The Dow Jones struggles to rally above the 34477 resistance.

The recent hawkish Fedspeak and the threat of two or more rate hikes mentioned by Fed Chair Powell, haven’t spooked the Dow Jones that much as it continues to find strength and trying to reach new highs. The market is taking good data as a path to the soft landing instead of worrying about more rate hikes. The recent miss in ISM Manufacturing PMI though is not a good sign for the future as all components were in contraction. This is something that was seen only in recessions, but the soft data has been giving false signals for a long time now without clear confirmation from the real economy.

Dow Jones Technical Analysis – Daily Timeframe

Dow Jones Technical Analysis
Dow Jones Daily

On the daily chart, we can see that the Dow Jones has recently bounced from the red 21 moving average and tried again to rally above the 34477 resistance. The buyers couldn’t sustain the momentum though and the price fell back below the resistance. We might see some consolidation here while the market is waiting for the economic data to push it on either side.

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 moving averages have crossed to the downside signalling a change in momentum. This might be the start of a bigger pullback into the 33448 support where we have also the 61.8% Fibonacci retracement level.

Dow Jones Technical Analysis – 1 hour Timeframe

Dow Jones Technical Analysis
Dow Jones 1 hour

On the 1 hour chart, we can see that the price is reacting to a previous swing high level and we might see a little pullback or even the start of a new rally here. At the moment, the market structure is bearish though as the moving averages are crossed to the downside and the price has been printing lower lows and lower highs.

In fact, the buyers may be better off waiting for the Dow Jones to take out the 34600 lower high first to start positioning for more upside as that would create a new higher high. The sellers, on the other hand, will want to wait for the price to break below the recent swing point at 34380 before piling in and extend the fall into the 33448 support.

Upcoming Events

Today we have the US Jobless Claims and the ISM Services PMI, while tomorrow will be the NFP day. The market has been reacting positively to good data lately, so we should expect the same, but bad data may bring back recession fears and weigh on the risk sentiment and the Dow Jones.

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