We have had 2 massive gaps in the Dow recently and now price seems to be following through and moving higher. As I have stated in previous ideas, I do believe the Dow is going to head higher over the months ahead so long as we don't get a black swan event. With that said, I am still cautious right now. As you can see on the Chart above, The Dow was forming a descending triangle over the last two months before the breakout gap occurred. Typically, a breakout gap will not fill right away and price will continue higher however, breakout gaps are more accurate when there is a substantial increase in Volume. I have attached a Chart below of DIA and as you can see, we have not had a substantial increase in volume. This could indicate that this gap will fill. I am waiting to see if price can fall into the yellow zone shown on chart. If price does fall into this zone and starts to show continued strength (to the high side), this may be a good level to begin opening additional Long positions.
Price has also closed above the Bollinger Bands and when the close above the bands is this extreme, it could signal a little pullback.. I am expecting the Markets to move higher but there may be some profit taking over the days ahead.. We will have to watch and see where prices goes.
I hope this was helpful and I will be sure to update this idea regardless of how this plays out in the weeks ahead.. Please feel free to share your analysis in the comments section and good luck trading!
Price has also closed above the Bollinger Bands and when the close above the bands is this extreme, it could signal a little pullback.. I am expecting the Markets to move higher but there may be some profit taking over the days ahead.. We will have to watch and see where prices goes.
I hope this was helpful and I will be sure to update this idea regardless of how this plays out in the weeks ahead.. Please feel free to share your analysis in the comments section and good luck trading!
