Dow Jones Technical Analysis | Forexlive

The Dow Jones ended last week on a positive note as
we got a strong rally despite some concerning data. The University of Michigan consumer
sentiment report missed forecasts across the board by a big margin once again.
The bearish signs keep on accumulating with the recent hawkish tone from Fed
speakers and the softening labour market data with the big misses in the recent
NFP report
and the rising Continuing Claims. The
buyers should be very careful going forward.

Dow Jones Technical
Analysis – Daily Timeframe

On the daily chart, we can see that the Dow Jones last
Friday broke above the key trendline and the resistance around
the 34100 level. Given that it wasn’t supported by any bullish catalysts, this
breakout might turn into a fakeout, so the buyers must be extra careful going
forward.

Dow Jones Technical
Analysis – 4 hour Timeframe

On the 4 hour chart, we can see more closely the
breakout. In case we get a pullback into the broken resistance, the buyers will
likely step in with a defined risk below the resistance turned support and
target another extension to the upside. The sellers, on the other hand, will
want to see the price breaking below the support to confirm the fakeout and
pile in for a drop into new lows.

Dow Jones Technical
Analysis – 1 hour Timeframe

On the 1 hour chart, we can see that the Friday’s
rally is diverging with
the MACD which is
generally a sign of weakening momentum often followed by pullbacks or
reversals. In this case, if we get a pullback, the buyers should pile in around
the support, but if the price breaks below it, the reversal would be confirmed,
and the sellers will regain control.

Upcoming Events

This week we have some top tier economic releases. We
begin tomorrow with the US CPI report which is going to be one of the most
important events of the week. On Wednesday, we have the US Retail Sales and PPI
data, while on Thursday we conclude with the latest US Jobless Claims figures.