DJI Dow Jones Looking Very Bearish (Chart Patterns Confluence)
DJI Dow Jones is looking very bearish now in right shoulder in head and shoulder chart pattern, gap fill and strong Fibonacci 50% and 38.2% retracement level. Drop a like and comment for more free analysis, signals and education.
The Head and Shoulder Pattern
This head and shoulder pattern is in confluence with the two recent tops in 2018 around the 26800 zone which gives it more bearish power:
The Gap Fill
What creates gaps? Often negative news if the gap is down and positive news is the gap is up. These gaps will act as support and resistance into the future and right now DJI has tested and shown bearish action at the resistance.
The Strong Fibonacci Retracement Resistance Levels 50% and 38.2%
I like to use Fibonacci because it's a simple way to find good entry levels in pullbacks. Since price action moves in waves you want to get in at the pullbacks to get a lower risk and higher reward for every swing/wave you trade.
The Trade Idea
Entry: 26421
Stop Loss: 26740
Take Profit: 25326
(Risk/Reward Ratio: 3.43)
You will most likely see a bounce on the undercut of the previous low 25340 level which also is in confluence with the Fibonacci extension level 127.2%. Close your trades here and then you could scalp the bounce (risky since you're in a bearish chart pattern) or what I recommend, wait for a new short opportunity drawing new Fibonacci retracement levels and wait for price to bounce to the 50% or 38.2 levels and look for bearish price action.
Hope this help. Happy trading!
The Head and Shoulder Pattern
This head and shoulder pattern is in confluence with the two recent tops in 2018 around the 26800 zone which gives it more bearish power:
The Gap Fill
What creates gaps? Often negative news if the gap is down and positive news is the gap is up. These gaps will act as support and resistance into the future and right now DJI has tested and shown bearish action at the resistance.
The Strong Fibonacci Retracement Resistance Levels 50% and 38.2%
I like to use Fibonacci because it's a simple way to find good entry levels in pullbacks. Since price action moves in waves you want to get in at the pullbacks to get a lower risk and higher reward for every swing/wave you trade.
The Trade Idea
Entry: 26421
Stop Loss: 26740
Take Profit: 25326
(Risk/Reward Ratio: 3.43)
You will most likely see a bounce on the undercut of the previous low 25340 level which also is in confluence with the Fibonacci extension level 127.2%. Close your trades here and then you could scalp the bounce (risky since you're in a bearish chart pattern) or what I recommend, wait for a new short opportunity drawing new Fibonacci retracement levels and wait for price to bounce to the 50% or 38.2 levels and look for bearish price action.
Hope this help. Happy trading!