ICmarkets
Long

DOW 30: Technical outlook and review...

FX:US30   Index of top 30 shares on Wall Street
142 0 0
Weekly view: Although the overall trend has been strong since early 2009, a temporary ‘ceiling’ to this index has formed around the 18098 region which has remained strong for an impressive four months!

Daily view: From this angle; we can see that prices sold off from the daily supply area 18207-18117 down to the daily trendline level extended from the low 17033. Overall, we’re expecting to see the bulls come back into the market here as a very neat-looking ascending triangle pattern is taking place.

4hr view: (As mentioned in the previous analysis, the DOW has been forming what we believe to be a long-term 4hr bullish pennant formation – upper 4hr trendline extends from the high18279, while the lower 4hr line has been taken from the low 17556).

The DOW, as you can see, rebounded beautifully from the upper limits of the 4hr pennant formation, which converged almost perfectly with 4hr resistance level at 18110. This sell off has once again placed price in ‘no-man’s-land’. With that, we feel there is a good chance that this index still has further to drop. Ideally, what our team would like to see is for price to retest the 4hr ascending trendline extreme, more specifically, the 17817 4hr support level . This would be a high-probability reversal area since it boasts additional support from the daily ascending trendline taken from the low 17033. However, committing to a buy position here by simply placing a pending buy order is a risky trade in our book, we would need to see lower timeframe buying strength before risking any capital on this idea, since fakeouts are common in this vicinity judging by the recent tests of this 4hr support area .

Our current buy/sell orders:

• Buy orders: 17817 (Predicative stop-loss orders seen at: dependent on where one confirms this area).

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

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