The
selloff that started at the beginning of August is starting to show signs of
weakness. Although nothing changed fundamentally, the Dow Jones started to
range as the market was just probably overstretched. This looks more like a
consolidation before another drop as the miss in yesterday’s US PMIs doesn’t
support the bullish case.
Dow Jones Technical
Analysis – Daily Timeframe
Dow Jones Daily
On the daily chart, we can see that the fakeout
above the key resistance at 35289
led to a big selloff afterwards with the Dow Jones breaking below the support
and the trendline. This
breakout opened the door for a fall into the 33805 level and we will likely see
the sellers pile in at every pullback unless the price rises back above the
34900 level invalidating the bearish case.
Dow Jones Technical
Analysis – 4 hour Timeframe
Dow Jones 4 hour
On the 4 hour chart, we can see that we’ve been
consolidating around the 34400 level for almost a week now as the market is
probably awaiting some catalyst to push it on either side. We can see that we
have a strong resistance around the 34800 level where we can also find the
38.2% Fibonacci retracement level
for confluence. This is
where we can expect the sellers to pile in with a defined risk above the level
to target the 33805 support.
Dow Jones Technical
Analysis – 1 hour Timeframe
Dow Jones 1 hour
On the 1 hour chart, we can see that we
have a minor support zone around the 34490 level which is likely to act as a
barometer for the sentiment. In fact, if the price falls below this level, we
can expect the sellers coming in and push the price to new lows. Vice versa, if
the price stays above the level, the buyers are likely to keep pushing the
price towards the 34800 resistance.
Today we will have the latest US Jobless Claims
report where the market will want to see if the labour market is still holding
or starting to weaken. Strong data may cause some hawkish repricing in
expectations and it’s unclear if the market will take it as good news because
of the resilient labour market or bad news because the Fed will keep at it.
Weak data should be more straight forward as it’s likely to cause recessionary
fears given yesterday’s PMIs and send the market lower. Tomorrow we will hear
from Fed Chair Powell who is set to speak at the Jackson Hole Symposium,
although the expectations are for him to just repeat their data dependency and
keep all the options on the table.
See also the video below: