ICmarkets

Areas to watch for longs on the DOW, what do you guys think?

FX:US30   Index of top 30 shares on Wall Street
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Weekly Timeframe: Last week shows price rebounded strongly from the ignored weekly Quasimodo level coming in at 17135. In the event that further buying is seen this week, we feel there’s a very good chance that price will attack the overall high seen at 18098.

Daily Timeframe: Yesterday saw the market decline in value. There was clearly strong selling opposition present around the daily swap level at 17896. Provided that the sellers can continue with this intensity today, we could potentially see the market decline further down towards a fresh daily decision-point demand area coming in at 17561-17655.

4hr Timeframe: The DOW opened 39 points lower than Friday’s close (17841) at 17802, consequently forcing price below a minor 4hr swap level at 17781 into another minor 4hr swap level seen at 17688.

Overall, we believe the DOW is heading north. The reason for this is simply because price is showing strength on the weekly timeframe (see above) at the moment, and that the 4hr timeframe saw price break above a respected 4hr supply area at 17934-17855 on Friday, which has likely cleared the path north (blue arrow) towards a small 4hr supply area seen at 18047-18014. Admittedly, price still has to contend with selling pressure seen from the daily timeframe (see above); and this is why any long trades taken will require strong corresponding lower timeframe confirmation.

With the above in mind, we are presently watching two areas for confirmed buying opportunities:

1. The small 4hr swap level at 17688 (tentative buy orders are seen just above at 17695), this may be a minor level, but it has been able to recently hold price higher which gives this line weight in our opinion.
2. The 4hr decision-point demand area at 17561-17617 (tentative buy orders are seen just above at 17625). This area is by far the favorite of the two since it has the added benefit of being located deep within the daily decision-point demand area mentioned above at 17561-17655.

Overall targets for both areas would be the 4hr supply area mentioned above at 18047-18014.

Current buy/sell levels:

• Buy orders: 17695 (Predicative stop-loss orders seen at: dependent on where one confirms this level) 17625 (Predicative stop-loss orders seen at: 17548).

• Sell orders: Flat (Predicative stop-loss orders seen at: N/A).

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