DJI - Dow Jones Showing Warning Signs
I always aim to K.I.S.S. by zooming out on the chart and looking for big picture key takeaways.
It's important to note the more we zoom out on a chart's timeframe (e.g. switching from a 1 day to a 1 month), the more significant the findings.
The chart shown is a 1 month chart:
(1) Negative Divergences on both the RSI and MACD since Jan-18
(2) Rising wedge since Mar-20 recovery (shown better on a weekly below)
I'm not saying the stock market is crashing tomorrow. What I am saying is there are long-term big picture warning signs telling us there is weakness in the price appreciation of the DJI that we need to be mindful of moving forward. Yes, at some point I expect these warning signs to resolve in a significant correction. However, that could take several years to play out. So we need to keep an eye on these charts.
It's important to note the more we zoom out on a chart's timeframe (e.g. switching from a 1 day to a 1 month), the more significant the findings.
The chart shown is a 1 month chart:
(1) Negative Divergences on both the RSI and MACD since Jan-18
(2) Rising wedge since Mar-20 recovery (shown better on a weekly below)
I'm not saying the stock market is crashing tomorrow. What I am saying is there are long-term big picture warning signs telling us there is weakness in the price appreciation of the DJI that we need to be mindful of moving forward. Yes, at some point I expect these warning signs to resolve in a significant correction. However, that could take several years to play out. So we need to keep an eye on these charts.
Comment:
Weekly view more clearly depicts the potential rising wedge pattern I have been monitoring
Weekly view more clearly depicts the potential rising wedge pattern I have been monitoring
(1) recent negative divergence on the RSI
(2) RSI peak in 1998, lower highs ever since while DJI continues to churn higher