Last Friday, the Dow Jones finished the day
positive as the US PCE report
came mostly in line with expectations. The market has already priced out almost
all the rate cuts that were expected at the beginning of the year and it’s now
expecting just one in September or December. This means that we will need more
worrying data to start pricing in a rate hike and put more downward pressure on
the market. For now, the dip-buyers are again in control as we continue to
erase the losses from the beginning of the month.
Dow Jones Technical
Analysis – Daily Timeframe
On the daily chart, we can see that the Dow Jones got
rejected from the key resistance level at
38464 where we had also the confluence of the
38.2% Fibonacci retracement level
and the red 21 moving average. This is
where the sellers stepped in with a defined risk above the resistance to
position for a drop into the 37128 level. The buyers piled in around the recent
lows and managed to erase most of the drop from the resistance. The price will
need to break above the strong 38464 resistance to invalidate the bearish setup
and open the door for a rally into a new all-time high.
Dow Jones Technical
Analysis – 4 hour Timeframe
On the 4 hour chart, we can see more
clearly the recent price action with the bounce around the lows as the market
faded the drop on the US GDP and PCE data. We might get stuck in range here
between the 38464 resistance and the 37700 support, so the market participants
will be watching carefully where the price is going to break out to in the next
days.
Dow Jones Technical
Analysis – 1 hour Timeframe
On the 1 hour chart, we can see that we
have another interesting zone around the 38000 level where we got several
rejections from in the past. If the price were to break below that zone, the
sellers will likely pile in already to position for a drop below the support
with a better risk to reward setup.
Upcoming Events
Tomorrow, we have the US Q1 Employment Cost Index and
the Consumer Confidence report. On Wednesday, we get the US ADP, the ISM
Manufacturing PMI, the Job Openings and the FOMC rate decision. On Thursday, we
will see the latest US Jobless Claims figures. On Friday, we conclude the week
with the US NFP and ISM Services PMI.
This article was written by FL Contributors at www.forexlive.com.