First of all what is Dow Theory?
According to Dow Theory, it's all about Higher Highs (HH) and Higher Lows (HL) or Lower Highs (LH) & Lower Lows (LL). These the building blocks of an uptrend or downtrend respectively: (You can further google it) Together, a series of HHs and HLs suggests that the market's upward momentum is intact.
Now Let’s take a look at the weekly chart:
Previously, The market was locked in a downtrend, consistently making Lower Lows and Lower Highs. But the pattern broke when the price could not broke the previous low (LL) of 14.42 (closing basis) and formed a new high at 19.45 (Breached Previous HL). Since then, the sequence of HHs and HLs started, with the latest Higher Low at 24.36. As long as the price respects this pattern, the uptrend remains intact.
However, there are challenges ahead. Athough, the EMA 89 (Fib) is offering support on the weekly chart, but a significant trendline resistance is there on both the weekly and monthly timeframes (marked in red) which is lower there on the graph from the previous HH. Breaking this resistance and the previous Higher High (HH) will be a little bit crucial, but a retest of the trendline may occur if the breakout is successful.
Note: I’m also a learner and open to suggestions. If you spot any errors or gaps in my analysis, feel free to share your thoughts. Thanks!
According to Dow Theory, it's all about Higher Highs (HH) and Higher Lows (HL) or Lower Highs (LH) & Lower Lows (LL). These the building blocks of an uptrend or downtrend respectively: (You can further google it) Together, a series of HHs and HLs suggests that the market's upward momentum is intact.
Now Let’s take a look at the weekly chart:
Previously, The market was locked in a downtrend, consistently making Lower Lows and Lower Highs. But the pattern broke when the price could not broke the previous low (LL) of 14.42 (closing basis) and formed a new high at 19.45 (Breached Previous HL). Since then, the sequence of HHs and HLs started, with the latest Higher Low at 24.36. As long as the price respects this pattern, the uptrend remains intact.
However, there are challenges ahead. Athough, the EMA 89 (Fib) is offering support on the weekly chart, but a significant trendline resistance is there on both the weekly and monthly timeframes (marked in red) which is lower there on the graph from the previous HH. Breaking this resistance and the previous Higher High (HH) will be a little bit crucial, but a retest of the trendline may occur if the breakout is successful.
Note: I’m also a learner and open to suggestions. If you spot any errors or gaps in my analysis, feel free to share your thoughts. Thanks!
Trade closed: target reached
How beautifully it respected the level as drawn :-D
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The information and publications are not meant to be, and do not constitute, financial, investment, trading, or other types of advice or recommendations supplied or endorsed by TradingView. Read more in the Terms of Use.
Disclaimer
The information and publications are not meant to be, and do not constitute, financial, investment, trading, or other types of advice or recommendations supplied or endorsed by TradingView. Read more in the Terms of Use.