Dow Jones Technical Analysis – The all-time high is just a touch away

Yesterday, the Fed hiked interest rates by 25 bps bringing the FFR to 5.25-5.50% as
widely expected. The policy statement was left basically 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 we see weakness.

Dow Jones Technical
Analysis – Daily Timeframe

On the daily chart, we can see that the Dow Jones
has eventually broke above the key resistance at 35289
and it’s now just 3% away from the all-time high. That’s incredible given that
it’s happening after the Fed hiked by 500 bps in a year. Nevertheless, the job
for the buyers may now be harder as at first signs of recession the market may
selloff pretty fast. But as long as the data keep on supporting the
soft-landing scenario, we are likely to see more highs.

Dow Jones Technical
Analysis – 4 hour Timeframe

On the 4 hour chart, we can see that the price is
struggling to sustain the breakout of the key resistance. In fact, we can
notice a divergence with the
MACD, which
is generally a sign of weakening momentum often followed by pullbacks or
reversals. In this case, the broken resistance turned support should
be a good level where the buyers can lean on as there’s also the 38.2%
Fibonacci retracement level for confluence.

Dow Jones Technical
Analysis – 1 hour Timeframe

On the 1 hour chart, we can see that the
price action is forming a rising wedge
pattern, which might be another confirmation that we are about to see a
pullback. The buyers will be waiting at the 35289 support with a defined risk
below the level and target the all-time high. The sellers, on the other hand,
will want to see the price breaking below the support level to pile in and
target the support near the 34800 level and eventually a big selloff into the
lows.

Upcoming Events

Today the main event
will be the US Jobless Claims as the Fed and the market remain focused on the
labour market performance. Data in line with expectations is unlikely to cause
big movements, but numbers that deviate notably from the forecasts are likely
to be market moving. If we see a big beat, the Dow Jones is likely to rally
again and probably hit the all-time high. On the other hand, if the data misses
expectations by a big margin, we should see the market falling as some
recessionary fears should cloud the risk sentiment. Tomorrow, it will be the
time for the latest US PCE and ECI reports with the market likely to focus more
on the wages data as higher wages could lead to another inflationary wave.