On the daily chart below for the
Dow Jones, we can see that the price keeps pulling back from the 34285 high
reached before the US Retail Sales missed expectations across the board. The
sellers are targeting the support at 33538 and the red long period
moving
average.
That’s the spot where we are
likely to find the buyers and the price to bounce. Last Friday, the market
extended the fall as the US
PMIs beat expectations and the details about inflation were not encouraging.
On the 4 hour chart below, we can
see that the price was trading within a rising channel and it was also diverging with the MACD, which is generally a signal of
a weakening momentum. The price has recently broken out of the channel turning
around the short-term trend.
The sellers are now in control
and the moving averages are acting as resistance for this correction. The
natural target is the 33538 support where the price will also find the daily
red long period moving average.
In the 1 hour chart below, we can
see that after breaking out of the bullish channel, the price is now trading
within a bearish one. At the moment, the price is trading roughly in the middle
of the channel, so there’s really nothing to do here.
If the price pulls back to the
top of the channel, we should see the sellers piling in again targeting the
bottom of the channel and eventually the 33538 support. The buyers, on the
other hand, may lean on the bottom of the channel to target the upper bound and
eventually a breakout.
