The Dow Jones Futures (CME: YM) has surged by 3% year-to-date, setting a promising tone for investors.
This upward trajectory reached new heights recently as the index futures rallied to achieve fresh peaks, largely propelled by the resurgent tech sector. Notably, the upbeat revenue forecast from leading semiconductor manufacturer Nvidia further ignited enthusiasm in the market, particularly surrounding the transformative potential of artificial intelligence (AI), ultimately driving Wall Street to attain historic highs.
As the earnings season draws to a close, the focus now shifts to forthcoming economic indicators, shaping investors’ outlook on future market movements. This week, all eyes will be keenly fixed on the release of the PCE Price Index, regarded as the Federal Reserve’s preferred measure of inflation. Given the market’s heightened sensitivity to inflation data, this event holds pivotal importance in delineating the potential trajectory of the Dow Jones Futures.
Technical
The current price action of the Dow Jones Futures reveals a notable uptrend characterized by several key technical indicators. Bullish sentiment became increasingly evident as the price surged beyond its 100-day moving average and maintained its trajectory within an ascending channel pattern.
This bullish momentum found support around the 38400 level, coinciding with the lower boundary of the ascending channel. However, the emergence of overbought conditions signalled by the RSI prompted a temporary pause in the uptrend, resulting in a downturn of the index futures. This led to the formation of resistance at the 39343 level, indicating a potential obstacle for further upside movement.
Currently, the index futures are trading near the 23.60% Fibonacci Retracement level, suggesting a critical juncture in price action. Looking ahead, a resurgence of bullish forces could facilitate a reversal, potentially leading to a retest of the 39343 resistance level. Conversely, a breakdown below the 23.60% Fibonacci level may indicate increased selling pressure, with the next support level around the 38.20% Fibonacci retracement.
Summary
With Dow Jones Futures riding high on a 3% surge year-to-date, buoyed by tech sector strength, attention shifts to pivotal economic data. Technical analysis signals an uptrend with resistance at 39343 and support near 38400, potentially guiding future market movements.
Sources: Reuters, TradingView
Piece Written By Nkosilathi Dube, Trive Financial Market Analyst
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