Yesterday, the US30 sold off into the close as the Fed came out a bit more hawkish than expected. In fact, not only the statement contained a line that hinted to a pushback against the March cut, but also Fed Chair Powell doubled down saying that a March cut was not their base case. All of the above though is conditional to the data as they just want to see inflation continuing to slow towards their target. If we get some weak reports, especially on the labour market side, then the Fed will have more confidence in delivering a rate cut in March.
US30 Technical Analysis – Daily Timeframe
On the daily chart, we can see that the US30 is approaching a key support zone around the 37800 level where we can also find the confluence of the 50% Fibonacci retracement level and the red 21 moving average. This is where we can expect the buyers to step in with a defined risk below the support to position for a new all-time high. The sellers, on the other hand, will want to see the price breaking lower to invalidate the bullish setup and target a drop into the 37125 level.
US30 Technical Analysis – 4 hour Timeframe
On the 4 hour chart, we can see that the latest leg higher diverged with the MACD which is generally a sign of weakening momentum often followed by pullbacks or reversals. In this case, given the break below the trendline, we should have got a confirmation of a reversal, and the target should be the previous swing low which stands right around the 37800 support zone.
US30 Technical Analysis – 1 hour Timeframe
On the 1 hour chart, we can see more closely the recent price action and we can notice that the market is rolling over from the resistance around at the 38230 level. This is where the sellers are stepping in for a continuation of the selloff from yesterday. If the price were to break above the resistance, the buyers might pile in already to target a new high but there’s a risk of seeing a fakeout some traders will need to be nimble around this level. From a risk to reward perspective, the support zone around the 37800 level remains the best spot for new long positions.
Upcoming Events
Today we get the latest US Jobless Claims figures and the ISM Manufacturing PMI. Tomorrow, we conclude the week with the US NFP report.
