Dow Jones Higher Low, Higher High w/ 38.2% Fib BeatDow Jones Futures are currently up nearly $900(4%) to $23,400 and has made a push above the 38.2% Fibonacci retracement level and out of the bearish lower levels of the total Fib range. With price moving above the 38.2% Fib level, price has also created a higher high and higher low which indicates a short-term uptrend so the view has now shifted from bearish to neutral with a bullish bias. Short-term resistance is expected to come in at the 50% Fibonacci level near $28,300, while a push above that level would put price back in the bullish half of the total Fib range. A bullish pullback from here would be any hold above the 38.2% Fib level with secondary support being at the 23.6% Fib. Going forward, price will remain in an uptrend as long as the 23.6% level isn’t violated.
With price making a higher high and higher low, the stop-loss level for long trades can now be moved from the previous doji candle last week to just below the higher low area. This higher low was at the 23.6% Fib level which acted as support for the past 8 sessions and represents an area of price demand prior to new highs being made overnight.
The Relative Strength Index(RSI) has now begun to move above the centerline at the 50 level. In general, an RSI reading above 50 indicates bullish momentum while an RSI reading below 50 indicates bearish momentum. A sign of bullish momentum continuation going forward would be a move above the 60 level.
The Price Percent Oscillator(PPO) continues to show the green PPO line rising above its purple signal line which indicates short-term bullish momentum. Going forward, the PPO needs to rise above the centerline at the 0 level in order for the intermediate to long-term momentum to shift bullish.
Overall, price is looking better here than it has at any other time over the past 5 weeks. A move above the 50% Fib level is critical here for bulls to maintain bullish momentum, with a move above the 61.8% Fib level needed to put price back into a true bullish trend.
I was previously expecting a move below the 23.6% Fib level, but with changing technicals comes a change in view, and right now traders appear to be bullish according to the technicals.
