ICmarkets

DOW: Weekly technical outlook and review...

FX:US30   Index of top 30 shares on Wall Street
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Weekly view: The DOW 30 index edged higher from support at 15978 last week, increasing its value by 322 points into the close 16436. Despite this, it’s difficult for us to judge whether this advance is legit. We only say this because of that humongous weekly spike that drove though this level three weeks ago at 15193 –bid strength could potentially be vulnerable here! Let’s see what the lower timeframes have to say on the matter…

Daily view: Down on the daily chart , we can see last week’s movement has effectively chiseled out a daily consolidation zone comprising of support at 16083 (located just above the aforementioned weekly support) and resistance at 16705.

4hr view: From Wednesday onwards, supportive pressure was seen from a small, yet highly resilient demand at 16161-16227, which, as you can see forced price to trade into Thursday’s high 16460 by the weeks end.

With price also now trading close to a swap resistance level at 16475, we may see some action around this barrier early on in today’s trade. This number, at least in our opinion, will likely play a key role in deciding where price will likely head to next.

On the assumption that 16475 is respected as resistance this week, we may see a sell-off back down to the aforementioned 4hr demand base. Due to the amount of times this zone has been hit though, we perceive this area to be weak, thus we’d be eyeing the 4hr demand zone below it at 15977-16083. At this point, you may be wondering why choose this area since it has already been hit (16024 – 04/09/15) and could also be weak. We agree it could be. However, what we like about this barrier is the fact that it is collectively made up of not only a weekly support at 15978, but also a daily support seen at 16083. As such this would be an area we consider buying from this week.

Supposing that 16475 is taken out, however, this may not only entice further buying back up to the aforementioned daily resistance level , but may also give traders the chance to go long on any retest seen. Beyond the daily resistance line, we’d also be looking at a very compact supply zone coming in just above it at 16943-16827, which is neatly placed just below a daily swap (supply) barrier at 16895-17005. This is a perfect little sell zone, since there is the daily resistance level lurking just below it where the majority of traders will be looking to sell at. The big boys know this and also know there will be a ton of buy stops above this daily barrier. Therefore, do keep an eye out for a potential short within the yellow fakeout zone between these two areas this week to sell into all those stops!

Levels to watch/ live orders:

• Buys: 15977-16083 Tentative – confirmation required (Stop loss: depends on where one confirms this area) Watch for offers at 16475 to be consumed and then look to enter on any retest seen at this number (confirmation required).
• Sells: 16943-16827 Tentative – confirmation required (Stop loss: depends on where one confirms this area)

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