Last week, the technological index of the Dow Jones #INDU registered a historical maximum at 35,130, after having consolidated around this area since May 10. The index managed to overcome this level on August 6, but from this maximum, it started a technical correction.
Right now the 4-hour chart is trading above the 21 SMA, we expect a bounce to be able to buy around the 34,910 area. Above this level, there could be bullish momentum at the +2/8 Murray line around 35.156.
Given that the +2/8 Murray represents a zone of strong resistance and is considered an imminent reversal point, we believe that if the Dow Jones fails to break this level or consolidates below this zone it will be a good opportunity to sell.
The key to a bearish outlook is to wait for a close on 4-hour charts below the SMA of 21 (34,910). Consolidation below this level is possible with targets in the zone of the 200 EMA located at 34,600.
The US employment report released on Friday caused concerns in the market about a possible adjustment earlier than expected. Possibly, there is still some fear in the market, so we should be careful because the Dow Jones could be very volatile waiting to know the inflation report.
An adjustment to the Fed's massive bond-buying program is likely to be announced. Influential Fed member Richard Clarida already suggested such a possibility last week.
Looking back at the 4-hour chart, we note that the Dow Jones is in a bearish divergence according to the Eagle indicator. The market is likely to make a strong technical correction towards the support zone around 33,600 as it did on July 19.
Support and Resistance Levels for August 09 - 10, 2021
Resistance (3) 35,288
Resistance (2) 35,194
Resistance (1) 35,036
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Support (1) 34,900
Support (2) 34,781
Support (3) 34,684
The material has been provided by InstaForex Company - www.instaforex.com