The Dow Jones Industrial Average Index gapped down this morning, after creating a new high on Friday (~10,523) in what seems to have been an exhaustion move.
The rising wedge (12 sept. – 16 sept.) signals a high probability of a down move that is usually quick and long in price. Today’s first support is set at $11,326 (morning low) and an eventual break of it will activate the older support from 11,140 area.
If the buyers will try to reach for the $11,463 area, the sellers will try to stop them in the 11,463-11,523 resistance zone. In this case, the down move will be re-confirmed, targeting $11,140 and even $10,775 in a few days.
The 4 hour chart below shows a broader picture of DJIA price evolution. We are clearly in a down trend (with lower highs and lows) and the failure to reach the previous low, on the 1st of September, indicated the first sign of bearish continuation. Each delineation in the chart below represents one week.
Further more, the 50% retracement is vital for determining the demand /offer balance. The two highs after the 1st of September that did not reach the previous high (01 sept, 11,710) are confirming the bearish outlook for the upcoming days (even weeks).
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