Dow Jones Index
A slow start to the week due to the Independence holidays resulted in the recent upward momentum stalling, encouraging profit-taking selling ahead of the 2023 highs. The Federal Reserve minutes showed some members would have preferred another interest rate increase which surprised investors, increasing the selling pressure.
US Nonfarm payrolls were less than expected and were the lowest number since December 2022, and the previous two months were revised lower as well. Worries about US economic growth saw the Dow close at the lows of the week and vulnerable.
The 10-day moving average is still pointing sideways, and the market remains in a range, so US equity traders are still cautious regarding the next significant move. This week`s US inflation and Retail sales data will determine if support can hold and the range trading conditions continue. Should the Dow Jones move below 33600 as the index would form a double-top pattern and could signal a move back to 33,000.
Resistance: 34000, 34155, 34500, 34590, 35000
Support: 33425, 33000, 32550, 31750
Nikkei 225 Index
Japanese equity investors locked in profits as the market continues to fall from 33-year highs. Sentiment also suffered as the US equity market moved lower as US 10-year interest rates rose above 4.00%, pushing the Nikkei index back to a vital support level.
A significant fall Friday in the USDJPY as resistance at 145.00 held, and a move higher in the 10-year Japanese government yield saw the Nikkei close the week on its lows. Some commentators speculate that the Bank of Japan might change its monetary policy strategy, which could harm the Nikkei, but most analysts believe this is unlikely.
The rise in the Nikkei index since March 2023 has been very significant, and further profit-taking is likely in the current environment. Like the Dow Jones, the Nikkei index is close to forming a double-top pattern. A break below 32225 could trigger a significant sell-off to 31,000. Should the market stabilize on Monday, expect sideways price action for the rest of the week.
Resistance: 34000, 35000
Support: 32245, 31650, 30800, 30500, 30000