The miss in the ADP report
yesterday gave the market a bit of relief after a series of strong economic
data like Jobless Claims, ISM Manufacturing PMI and Job Openings. The ISM services PMI has also
printed bang on expectations, and coupled with the other reports, supports the
soft-landing narrative. Moreover, the market was also helped by the fall in
Treasury yields and Oil prices which might calm the fears of another
inflationary wave. Technically, we are also around key levels and the selloff
after the more hawkish than expected FOMC dot plot might
need at least a correction.
Dow Jones Technical
Analysis – Daily Timeframe
Dow Jones Daily
On the daily chart, we can see that the Dow Jones
bounced yesterday around the 32900 level helped by the miss in the ADP report.
The bearish trend remains intact though as the price continues to print lower
lows and lower highs with the moving averages being
crossed to the downside. If we see a bigger correction, the best place to lean
on for the sellers will be the resistance around
the 34000 level where we have the confluence with the
trendline and
61.8% Fibonacci retracement level.
For now, the target remains the 32597 level.
Dow Jones Technical
Analysis – 4 hour Timeframe
Dow Jones 4 hour
On the 4 hour chart, we can see that we have a
strong resistance zone around the 33260 level where we have the confluence of
the minor trendline, the previous support turned resistance and the
38.2% Fibonacci retracement level. This is where the sellers are likely to step
in with a defined risk above the trendline to target the 32597 level and
ultimately a break lower. The buyers, on the other hand, will want to see the
price breaking above the trendline to position for a rally into the 34000
resistance zone.
Dow Jones Technical
Analysis – 1 hour Timeframe
Dow Jones 1 hour
On the 1 hour chart, we can see that the
latest leg lower in the Dow Jones is diverging with
the MACD which
is generally a sign of weakening momentum often followed by pullbacks or reversals.
In this case, we should see a pullback into the 33260 level where the sellers
are likely to step in, but if the price continues higher and breaks through the
trendline, we will have a confirmation of the reversal and the buyers should
have free way until the 34000 resistance.
Upcoming Events
Today we have the Jobless Claims report, which
continues to show a solid labour market and given the reaction to the miss in
the ADP yesterday, we can expect a rally in case of a miss and a drop in case
of a beat. Tomorrow, it will be the time for the NFP report which is the only
one the Fed will see before its next rate decision.
