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The Dow Jones Industrial Average hit a new all-time high last week, sending the index above the 30,600 level. The latest move was driven by strong gains in INTEL, and better-than-expected weekly jobless claims data from the US economy.
After breaking past the former all-time high, around the 29,55 level, the Dow Jones Industrial Average has been steadily pushing higher. The 11,000 point recovery from the March 2020 has sent a serious message to bears.
Going into this week the DJIA is set for further gains, with the technical surrounding the index clearly painting a bullish price picture. Undoudtedly the DJIA is heavily linked to the performance of the US economic due to the broad basket of stocks inside the index such as financial, tech, aviation, and retail stocks.
Avaiation has been a notable drag on the DJIA, however, financial stocks have been gaining traction lately, while technology stocks like INTEL have been a firm favorite with investors since the summer.
Top-tier economic data events such as US monthly jobs reports, ISM manufacturing report, and FOMC minutes all have the ability to move the index this week. It should be noted that traders and investors have been shrugging-off any bearish news towards the US economy and COVID-19 infections since the Federal Reserve announced Q4 last year.
Bad economic data has also reinforced the notion that the US central bank will continue its massive bond buying scheme until a recovery starts to take hold. The has been a major concern for traders who could do not believe in the fundamentals of the US economy and want to short the index.
US politics may also have a hand in the direction of the DJIA this week. The Dow Jones Industrial Average is extremely risk sensitive and is very sensitive to geo-political and political shocks.
The Georgia run-off presents a very real risk-event which could temper the index’s gains at the start of the week. If the index can get past this event unscathed, then bulls may look to pile back into the index and tarhet new highs above 30,600.
Dow Jones Industrial Average Short-Term Technical Analysis
The four-hour time frame shows that a large inverted head and shoulders pattern has been activated, placing the index in a very bullish technical position while the price trades above the head of the pattern.
The overall size of the bullish price pattern indicates that the Dow Jones Industrial Average could rally towards the 36,000 level over the short-term, marking a huge amount of appreciation for the index.
Source by ActivTrader.
Technical traders should note that a substantial amount of bearish MACD price divergence has built up on the mentioned time frame and extends down towards the 29,000 level.
Additionally, the Dow Jones Industrial Avergae has a huge price gap which also extends down towards the 28,500 support level.
Dow Jones Industrial Average Medium-Term Technical Analysis
Looking at the daily time chart, an extremely large bullish reversal pattern was activated after bulls broke above the former all-time high, around the 29,550 level, in November last year.
According to the size of the bullish pattern, the Dow Jones Industrial Average could rally towards the 40,000 level over the medium to long-term horizon.
Source by ActivTrader.
Massive amounts of bearish MACD price divergence has also built on the daily time frame, and extends down towards the 28,000 support level.
DJIA bears ideally need to move the price below the 28,500 level in order to move the index below its 200-day moving average. In reality, any pullbacks towards this area may be a chance for bulls to scale into longs in expectations of further gains.
