Yesterday, the Fed left interest rates unchanged as expected with basically no change to the policy statement. Fed Chair Powell repeated once again that they are “proceeding carefully” as the full effects of the policy tightening have yet to be felt.
There were some expectations for him to hint or signal something for the December meeting given that the September Dot Plot showed another rate hike by the end of the year, but Powell instead said that they “have not made any decisions on future meetings” sparking a rally in the Dow Jones.
On the data front, yesterday the US Job Openings beat expectations, but the ISM Manufacturing PMI missed by a big margin. The market might be taking this as good news for a relief rally in the short term, but the bulls may want to be careful going forward.
Dow Jones Technical Analysis – Daily Timeframe
Dow Jones Daily
On the daily chart, we can see that the Dow Jones bounced around a previous swing level and it’s now approaching key resistance levels. In fact, we can see that the price is near the 61.8% Fibonacci retracement level and the red 21 moving average.
This is where we can expect the sellers to step in and further increase the bearish bets if the price reaches the trendline. The buyers, on the other hand, will want to see the price breaking above the trendline to invalidate the bearish trend and start eyeing the all-time high.
Dow Jones Technical Analysis – 4 hour Timeframe
Dow Jones 4 hour
On the 4 hour chart, we can see that we had a divergence with the MACD right around the key swing level. This is generally a sign of weakening momentum often followed by pullbacks or reversals. In this case, since the price broke above the minor trendline, the reversal got confirmed and the buyers piled in more aggressively to extend the rally into new highs.
Dow Jones Technical Analysis – 1 hour Timeframe
Dow Jones 1 hour
On the 1 hour chart, we can see that the trend on this timeframe is clearly bullish with the price printing higher highs and higher lows and the moving averages being crossed to the upside. We can expect this trend to continue as long as the price stays above the trendline and the red 21 moving average. If the price falls below the trendline, the sellers should step in and position for a drop into new lows as that could be the signal that the short term correction has ended.
Upcoming Events
Today, we have only the US Jobless Claims data, which will be important for the market given the recent weakness in Continuing Claims. Tomorrow, we conclude the week with the US NFP report and the ISM Services PMI.
