Bulls took to the Dow Jones 30 Futures (CBOT: YM) to send the index higher by 2.68% from last week’s lows. Driving the market higher was the Federal Reserve, which hinted at the possibility of a slowdown in rate hikes if inflation and consumer spending subdue.
Dow Jones 30 Futures’ downtrend was undone by a breakout above the resistance of the downward-sloping channel formation. Support and resistance were formed at the 33180 and 33569 levels, respectively.
If bullish traders march ahead, price will likely be driven toward resistance at the 33569 level. If the resistance level fails to hold, a breakout on high volumes could signal the beginning of a surge in price, with the 33868 level a probable point of interest for the bull case.
Alternatively, if bears look to selling at a premium level, a reversal from resistance is likely. If price approaches the upside on declining volume, it can likely signal the lack of bullish interest and a probable reversal. Traders will look to the 33180 level with interest if the index is sent lower.
This week, all eyes will be on the United States Fed Chair Powell’s Testimony and U.S. Non-Farm Payrolls. Traders will mainly look to any signs of inflation’s progress. If the Non-Farm Payrolls come in hotter than expected, it will likely prompt further rate hikes and dampen equity valuations, making the 33180 level probable.
Sources: CME FedWatch Tool, Reuters, TradingView