Dow Jones Technical Analysis – The all-time high is in sight

Last week, the Fed hiked interest rates by 25 bps bringing the FFR to 5.25-5.50% as
widely expected. The policy statement was left unchanged, so the market
couldn’t get any signal for the next moves. In fact, the focus was not on the
decision itself, but on the forward guidance. Fed Chair Powell in his press
conference repeated the message that they are data dependent and that all
options are on the table, which means that they could either hike in September
if the data remains strong or pause if they see weakness. The data following
the FOMC meeting has been supporting the soft-landing narrative with US Jobless Claims beating expectations and the US PCE and Employment Cost Index missing the forecasts.

Dow Jones Technical
Analysis – Daily Timeframe

On the daily chart, we can see that the Dow Jones
has recently broke out of the key 32289 resistance and it’s
now targeting the all-time high, which is less than 3% away. We are seeing some
consolidation above the resistance as the market is taking a breather after a
record winning streak.

Dow Jones Technical
Analysis – 4 hour Timeframe

On the 4 hour chart, we can see that we had a divergence with the
MACD which is
generally a sign of weakening momentum often followed by pullbacks or
reversals. In this case, we got a pullback into the previous resistance now
turned support where we had also the 38.2% Fibonacci retracement level
for confluence. The
buyers stepped in with a defined risk below the support to target the all-time
high.

Dow Jones Technical
Analysis – 1 hour Timeframe

On the 1 hour chart, we can see that the
bullish momentum is still pretty strong and we should see more buyers piling in
if the price breaks above the recent lower high at 35700. The sellers, on the
other hand, might try to step in at the lower high with a defined risk above
the high in anticipation of this whole breakout failing and leading to a
selloff. More conservative sellers may want to wait for the price to first fall
below the 35289 support before piling in and target new lows.

Upcoming Events

This week is
packed with many top tier economic indicators. We begin tomorrow with the US
ISM Manufacturing PMI and the US Job Openings. On Wednesday, we will see the US
ADP report. Moving on to Thursday, the market will be focused on the US Jobless
Claims and the US ISM Services PMI. Finally on Friday, we conclude the week
with the main event: the US NFP report.