Dow to rally higher?
Updated
Hi Guys,
The US 30, Dow Jones, is still looking quite bullish and I posted recently about the index heading towards resistance. That resistance is the blue box on the chart and the line within the box being the all important 1.618 retracement of bear market high to low.
Since that time there has been a pullback which has seen price back down to the lower part of the nicely formed channel the dow has been travelling in and found support where it should,.... at previous resistance and the 20MA, indicating the bulls are still wanting to go higher. If we do get a rally and a push higher then the DOW will be heading into that mentioned resistance zone. If we take a fib based extension of the latest impulsive move on daily timeframe, then the 1.0 fib extension lands precisely at the same point as the 1.618 retrace I mentioned. This further strengthens the possibility of strong resistance at that point. Along with that the DOW will be headed to the top of the nicely formed channel and would be ideal if price does not touch the top of the channel, which would indicate loss of momentum heading into the zone. Also if we get the move higher daily RSI will likely head into overbought territory and may show divergence, which would be really nice confluence in that zone. ( I have drawn a dashed line on the RSI , with what that may look like).
The weekly timeframe also has the entry point of a massive butterfly harmonic pattern at that point. I am hoping that we do get a rally higher because there will be great confluence at that zone and nice sell opportunity with great risk to reward.
Safe Trading all.
The US 30, Dow Jones, is still looking quite bullish and I posted recently about the index heading towards resistance. That resistance is the blue box on the chart and the line within the box being the all important 1.618 retracement of bear market high to low.
Since that time there has been a pullback which has seen price back down to the lower part of the nicely formed channel the dow has been travelling in and found support where it should,.... at previous resistance and the 20MA, indicating the bulls are still wanting to go higher. If we do get a rally and a push higher then the DOW will be heading into that mentioned resistance zone. If we take a fib based extension of the latest impulsive move on daily timeframe, then the 1.0 fib extension lands precisely at the same point as the 1.618 retrace I mentioned. This further strengthens the possibility of strong resistance at that point. Along with that the DOW will be headed to the top of the nicely formed channel and would be ideal if price does not touch the top of the channel, which would indicate loss of momentum heading into the zone. Also if we get the move higher daily RSI will likely head into overbought territory and may show divergence, which would be really nice confluence in that zone. ( I have drawn a dashed line on the RSI , with what that may look like).
The weekly timeframe also has the entry point of a massive butterfly harmonic pattern at that point. I am hoping that we do get a rally higher because there will be great confluence at that zone and nice sell opportunity with great risk to reward.
Safe Trading all.
Note
Another fib level I forgot to mention was the trend based extension (measured on weekly chart makes it clearer) is low of 23 October candle to high of 1 April candle to low of 15 April candle. The 0.618 extension of this move also lands very close to to the other mentioned fib levels, thus giving more credibility to the zone highlighted on the chart.Note
THis idea is back in play with the current price the US 30 is trading at. The old saying "The market will do the most obvious things in the least obvious way" might apply to this idea if indeed the Dow pushes on from current price level.
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