DJI - longterm Pitchfork Pattern is still valid since July 1932
With all this talk about another great depression like stock market crash happening in the very near future, i thought i’d join the fun and take a look and analyse the DJI Monthly Chart.
Using an extended Pitchfork Pattern (A,B,C), we can clearly see that the DJI has been in an Upwards Pitchfork Pattern since the Month of the 1st July 1932.
Chart wise, you can see The Wall Street Crash of 1929 which started the Month of the 2nd September 1929 and ended the Month of the 1st July 1932. History says the crash ended on 13th Nov 1929 but chart wise it didn’t, because the bottom turned out to be around $40 on the 1st July 1932 not $195 on the 13th Nov 1929.
Chart wise, the 2020 Covid-19 crash started in the Month of 2nd Jan 2020 with what’s looks like a Monthly Shooting Star Candle which then lead to 2 more Bearish Monthly Candles. The Candle from the Month of 2nd March wicked all the way down to the depths of hell & found strong support from its Upper Yellow Pitchfork Support Line, the price then managed to close back above its Upper Light Green Pitchfork Support Line.
Note that the last time the DJI closed a Monthly Candle below its Pitchfork Median Line was the Month of the 2nd Feb 2009. The Price eventually made it its way back ABOVE its Pitchfork Median Line on the month of the 1st April 2009.
At the moment, DJI has found strong resistance from its Upper Light Blue Pitchfork Resistance Line. What is interesting is that this Pitchfork Resistance Line served as strong resistance from the Month of the 3rd May 1999 - 3rd Jan 2000, note that the DJI failed to close a Monthly candle above this level and has not closed a Monthly candle above this Pitchfork Resistance Line since the Month of the 2nd Sept 1929.
If we take a look at the Moving Average Convergence Divergence (MACD) we can see that the MACD Line (Blue Line) is still in the Positive Zone above the 0.0 Base Line. Note that the MACD Line (Blue Line) is curving downwards and if it crosses back under the Signal Line (Orange Line) then that will be a potential sell signal on this 1 Month timeframe. Note that the MACD Line (Blue Line) has not been in the Negative Zone under the 0.0 Base Line since the Month of 1st Sept 2010.
Looking at the Average Directional Index (ADX DI) we can see that Positive Momentum has weakened on this 1 Month timeframe with the +DI (Green Line) dropping to 23.82 and Negative Momentum has risen with the -DI (Red Line) at 14.94. Note that the Trend Strength is sideways with the ADX (Orange Line) at 21.93 and still above its 9 Period EMA (Black Line) which is at 21.05. If the -DI (Red Line) ever crosses back ABOVE the +DI (Green Line) then that would mean that Negative Momentum has become DOMINANT over Positive Momentum on this 1 Month timeframe.
If we look at the Relative Strength Index (RSI) we can see that the RSI (Purple Line) has dropped out of the Overbought Zone at the moment. Note that the RSI (Purple Line) is also below its 9 Period EMA (Orange Line) which is a sign of weakness for Positive Momentum on this 1 Month timeframe.
Note that we also have DIVERGANCE with the Price and the RSI on this 1 Month timeframe.
The Wall Street Crash of 1929 dropped to around -89%. A drop of -89% from the price level at the moment would take DJI Price to around $3,800.
The Covid-19 Crash of 2020 dropped to around -38%. A drop of -38% from the price level at the moment would take the DJI Price to around $21,550.
Here is a closer look at this 1 Month chart.
Note that if DJI does drop massively again then it has potentially 4 Pitchfork Support Levels to support it before it reaches the Pitchfork Median Line.
Note that the Upper Dark Green Pitchfork Support Line will be a crucial level to watch as it has acted as support & resistance on multiple occasions over the last 121 years.
I hope this post has been helpful with your trading ;-)
On a funny note, some may wonder whether or not the 1929 crash happened to mark the conception of a certain individual called Warren Buffett ;-)
Using an extended Pitchfork Pattern (A,B,C), we can clearly see that the DJI has been in an Upwards Pitchfork Pattern since the Month of the 1st July 1932.
Chart wise, you can see The Wall Street Crash of 1929 which started the Month of the 2nd September 1929 and ended the Month of the 1st July 1932. History says the crash ended on 13th Nov 1929 but chart wise it didn’t, because the bottom turned out to be around $40 on the 1st July 1932 not $195 on the 13th Nov 1929.
Chart wise, the 2020 Covid-19 crash started in the Month of 2nd Jan 2020 with what’s looks like a Monthly Shooting Star Candle which then lead to 2 more Bearish Monthly Candles. The Candle from the Month of 2nd March wicked all the way down to the depths of hell & found strong support from its Upper Yellow Pitchfork Support Line, the price then managed to close back above its Upper Light Green Pitchfork Support Line.
Note that the last time the DJI closed a Monthly Candle below its Pitchfork Median Line was the Month of the 2nd Feb 2009. The Price eventually made it its way back ABOVE its Pitchfork Median Line on the month of the 1st April 2009.
At the moment, DJI has found strong resistance from its Upper Light Blue Pitchfork Resistance Line. What is interesting is that this Pitchfork Resistance Line served as strong resistance from the Month of the 3rd May 1999 - 3rd Jan 2000, note that the DJI failed to close a Monthly candle above this level and has not closed a Monthly candle above this Pitchfork Resistance Line since the Month of the 2nd Sept 1929.
If we take a look at the Moving Average Convergence Divergence (MACD) we can see that the MACD Line (Blue Line) is still in the Positive Zone above the 0.0 Base Line. Note that the MACD Line (Blue Line) is curving downwards and if it crosses back under the Signal Line (Orange Line) then that will be a potential sell signal on this 1 Month timeframe. Note that the MACD Line (Blue Line) has not been in the Negative Zone under the 0.0 Base Line since the Month of 1st Sept 2010.
Looking at the Average Directional Index (ADX DI) we can see that Positive Momentum has weakened on this 1 Month timeframe with the +DI (Green Line) dropping to 23.82 and Negative Momentum has risen with the -DI (Red Line) at 14.94. Note that the Trend Strength is sideways with the ADX (Orange Line) at 21.93 and still above its 9 Period EMA (Black Line) which is at 21.05. If the -DI (Red Line) ever crosses back ABOVE the +DI (Green Line) then that would mean that Negative Momentum has become DOMINANT over Positive Momentum on this 1 Month timeframe.
If we look at the Relative Strength Index (RSI) we can see that the RSI (Purple Line) has dropped out of the Overbought Zone at the moment. Note that the RSI (Purple Line) is also below its 9 Period EMA (Orange Line) which is a sign of weakness for Positive Momentum on this 1 Month timeframe.
Note that we also have DIVERGANCE with the Price and the RSI on this 1 Month timeframe.
The Wall Street Crash of 1929 dropped to around -89%. A drop of -89% from the price level at the moment would take DJI Price to around $3,800.
The Covid-19 Crash of 2020 dropped to around -38%. A drop of -38% from the price level at the moment would take the DJI Price to around $21,550.
Here is a closer look at this 1 Month chart.
Note that if DJI does drop massively again then it has potentially 4 Pitchfork Support Levels to support it before it reaches the Pitchfork Median Line.
Note that the Upper Dark Green Pitchfork Support Line will be a crucial level to watch as it has acted as support & resistance on multiple occasions over the last 121 years.
I hope this post has been helpful with your trading ;-)
On a funny note, some may wonder whether or not the 1929 crash happened to mark the conception of a certain individual called Warren Buffett ;-)
Comment:
At the moment of typing this, DJI is back ABOVE its Upper Light Blue Pitchfork Resistance/Support Line. What is interesting is that if DJI closes this Monthly candle above the Upper Light Blue Pitchfork Resistance/Support Line then this will be the first time DJI successfully closes a Monthly candle above this Longterm Pitchfork Resistance/Support since the Month of the 2nd Sept 1929.
Here is a closer look at the 2008 Crash.
Here is a closer look at the 2020 Covid-19 Crash.