Last week, we got some risk aversion in the market as the tensions in the Middle East intensified. In fact, going into the weekend the bearish momentum increased as ABC news reported that the Israeli military got the "green light" to move into Gaza whenever it was ready. Since we haven't seen any ground offence over the weekend, we might see a relief rally today.
Dow Jones Technical Analysis – Daily Timeframe
On the daily chart, we can see that the Dow Jones perfectly rejected the resistance zone around the 34000 level where the had also the 61.8% Fibonacci retracement level for confluence. The sellers are targeting the 32597 level and that’s where we can expect the buyers to step in more strongly with a defined risk below the level to position for a rally back to the downward trendline.
Dow Jones Technical Analysis – 4 hour Timeframe
On the 4 hour chart, we can see that after breaking below the support around the 33500 level, where we had also the 50% Fibonacci retracement level for confluence, the bearish momentum intensified and the price overstretched to the downside as depicted by the distance from the blue 8 moving average. In such instances, we can generally see a pullback into the moving average or some consolidation before the next move.
Dow Jones Technical Analysis – 1 hour Timeframe
On the 1 hour chart, we can see that from a risk management perspective, the sellers would be better off waiting for the price to pull back into the trendline where we can find the confluence with the 38.2% Fibonacci retracement level and the red 21 moving average. The buyers, on the other hand, will want to see the price further breaking above the trendline to increase the bullish bets into the 34000 resistance.
Upcoming Events
Tomorrow, we will get the US PMIs and the market might not like bad figures given the fragile risk sentiment. On Thursday, we will see the US Jobless Claims data with Continuing Claims recently showing some softness in the labour market. Finally, on Friday, we will get the US PCE report, which is not expected to change anything for the Fed at this time.
