The positive risk sentiment supported by the soft-landing narrative is giving the Dow Jones a tailwind to climb to new highs. The miss in the US CPI report coupled with the strong labour market data, as confirmed again last Thursday with the US Jobless Claims, and the improving consumer sentiment, as shown by the University of Michigan report last Friday, keep giving the buyers good reasons to trade in that direction. All else being equal, we should see new highs for the Dow Jones barring a quick deterioration in the economic data.
Dow Jones Technical Analysis – Daily Timeframe
On the daily chart, we can see that the Dow Jones bounced on the swing level at 33890 and rallied all the way back to the highs around the 34800 level. The buyers are now targeting the 35289 resistance and given the current positive risk sentiment in the markets, looks like there’s no real barrier until then. The sellers are likely to step in at the 35289 resistance to target a big fall towards the 32684 support.
Dow Jones Technical Analysis – 4 hour Timeframe
On the 4 hour chart, we can see that the Dow Jones is now basically ranging between the 33890 level and the 34800 high. The moving averages have been a good indicator for the change in trend within the range. At the moment the moving averages are crossed to the upside and the price has recently bounced on the red 21 moving average as the buyers remain in control and are targeting the 35289 resistance. If we see them failing to break above the 34800 high, then we should see the sellers piling in and target the 33890 support.
Dow Jones Technical Analysis – 1 hour Timeframe
On the 1 hour chart, we can see that we have another mini range between the 34515 level and the 34800 high. This is giving us a clear setup with two possible scenarios:
- If the price breaks to the upside, the buyers should pile in and extend the rally into the 35289 resistance.
- If the price breaks to the downside, the sellers are likely to jump onboard and target the 33890 support.
Upcoming Events
This week is a bit poor on the data front with just the US Retail Sales scheduled for tomorrow and the US Jobless Claims for Thursday. Given the positive sentiment in the markets and the soft-landing narrative, we should expect the Dow Jones to rally in case the data beats expectations or comes out in line with expectations. It’s likely that only big misses would cause some fear in the market and lead to a big selloff, while little misses should be opportunities to buy the dips.
