ICmarkets

DOW 30: Technical outlook and review.

FX:US30   Index of top 30 shares on Wall Street
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Weekly Timeframe: The DOW has been trading beautifully within a nice-looking trending channel for over five years now. The recently closed weekly candle shows that the upward momentum may be fading, as price failed to make a higher high which as a result formed a weekly inside candle. Let’s take a look on the lower timeframes to see what we can find.

Daily Timeframe: Further buying was seen yesterday, which saw the index advance to a fresh high of 17925. If the buyers can hold out above 17841, then this could provide a nice platform in which to begin looking for buying opportunities.

1hr Timeframe: We mentioned in yesterday’s report that a small break (blue arrow) had been seen above a 1hr supply area at 17896-17864, which later resulted in follow-through buying.

Although we have seen a rally in price, we still feel the 1hr decision-point demand area seen below at 17826-17842 (located around the 17841 daily level) is a magnet for price. The reason being is this is likely where pro money made the decision to breakout higher, and thus there may well be unfilled buy orders still remaining. With that being said, check out how each time the market recently traded higher, price spiked lower (see red circles) to collect unfilled buy orders to continue trading north, which at the same time has potentially cleared the path south down to the aforementioned 1hr decision-point demand area.

Another poignant fact regarding the current price structure is that if price did indeed decline, there would likely be a ton of buy orders lurking around the 17848 area (red arrow) with tight stops set just below. This would give well-funded traders effectively the chance to add further liquidity here using the sell stops from fader traders and also breakout sellers’ sell orders to buy into.

Given the points made above, a pending buy order has been set at 17843, just above the 1hr decision-point demand area, with a tight stop placed below at 17825.

Buy/sell levels:

• Buy orders: 17843 (Predicative stop-loss orders seen at: 17825).

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

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