Weekly Timeframe: The weekly timeframe shows that the DOW advanced to a fresh high of 18098 just before the Christmas holidays. This move consequently attracted active sellers into the market which resulted in a two-bar bearish pattern forming, which is essentially a pin bar when combined.
Daily Timeframe: For anyone who is considering selling on the basis of the two-bar reversal pattern seen on the weekly chart may want to hold fire, since price has effectively traded into a (what we like to call) a mid-range Quasimodo daily support level at 17717. Providing that the sellers can convincingly break below this level, a sell off down towards an obvious daily swap level at 17362 may well take place.
4hr Timeframe: The 4hr timeframe shows a clearer view of the mid-range daily Quasimodo support level (seen as an area on the 4hr timeframe [17717-17757]) at 17717. We see this 4hr area as metaphorical floor to this market, and removing this floor would very likely see the DOW sell off down towards a 4hr decision-point demand area visible at 17326-17381 (pending buy order set just above at 17392), which if you look to the left is also beautifully located around the daily swap level mentioned above at 17362.
With that being said, we still feel that there is a good chance the floor will continue holding the market higher this week. If this is to be the case, we would only consider buying the DOW if the 4hr supply area seen above at 17944-17885 was engulfed.
Current buy/sell levels:
• Buy orders: 17392 (Predicative stop-loss orders seen at: 17320).
• Sell orders: Flat (Predicative stop-loss orders seen at: N/A).