Let’s Focus on the DJIA

Let’s Focus on the DJIA

Let’s Focus on the DJIA

$DIA

Since the beginning of this week, the US stock market has been compressing between 2 converging H-4 trendlines at 18971 and 18808 respectively, forming a possible Bullish Pennant formation.

This technical pattern is considered by most of us to be a continuation setup.

Therefore, should the DJIA close above the top edge of the Pennant take place followed with a retest as Support, we would consider going in long this market, mainly due to the room seen to move further North on the bigger picture.

But, a break below the above discussed Bullish Pennant is not necessarily considered a Bearish signal, as we still have 3 areas of demand positioned below that mark.

The 1st, the lowest of the 3, comes in at 18548-18604: a H-4 demand which was formed following the break of the daily Quasimodo Resistance mark at 18636, the next Southside target on the daily frame.

The 2nd, the middle of the 3 is seen at 18629-18683: a H-4 demand base that intersects nicely with the weekly trendline support extended from the high 18365, the next Southside target on the weekly frame.

The 3rd area drawn from 18740-18801, which is also a H-4 demand barrier unfortunately has little higher frame significance so it is liable to be faked should price test this zone.

Commentary: traders have to be patient here and wait for the H-4 candles to make a decision within the 2 uniting trendlines. A break higher followed by a retest would signal to potentially buy the index. On the other side of that coin, a break lower could open up the possibility for long trades from either one of the above said H-4 demands.

Points to take into consideration:

  • Fed Speakers on Friday:
    • St. Louis Fed President Bullard (FOMC voter) (05:30a EST)
    • Kansas City Fed President George (FOMC voter) (09:30a EST)
    • New York Fed President Dudley (FOMC voter) (09:35a EST)
    • Dallas Fed President Kaplan (will vote in 2017) (01:30p EST)
    • Fed Governor Powell (FOMC voter) (09:45p EST)

Marks to watch/live orders:

  • Buys: Watch for a close above the H-4 trendline Resistance and then look to trade any retest seen thereafter (waiting for a H4 Bullish close to form following the retest is preferable prior to pulling the trigger – stop loss: ideally beyond the trigger candle).18740-18801 (reasonably sized H-4 Bullish close required prior to pulling the trigger) stop loss: ideally beyond the trigger candle). 18629-18683 (a possible area to consider entering at market from) stop loss: 18618). 18548-18604 (a possible area to consider entering at market from) stop loss: 18537).
  • Sells: Flat (stop loss: N/A)

Stay tuned….

 

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Paul Ebeling

Paul A. Ebeling, polymath, excels in diverse fields of knowledge. Pattern Recognition Analyst in Equities, Commodities and Foreign Exchange and author of “The Red Roadmaster’s Technical Report” on the US Major Market Indices™, a highly regarded, weekly financial market letter, he is also a philosopher, issuing insights on a wide range of subjects to a following of over 250,000 cohorts. An international audience of opinion makers, business leaders, and global organizations recognizes Ebeling as an expert.

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