Dow Jones 50% Fib Rejection
After seeing a gap-up open of nearly $900 after an overnight futures session surge, the Dow Jones failed to push higher during regular market trading today and closed down -$884(-3.7%) while also failing to move above the 50% Fibonacci level pointed out in the previous chart shared. Price needs to regain the 50% Fib level in order for the overall bearish trend in this coronavirus selloff to be broken and for a new bull trend to form.
Price closed at $22,653 just above the 38.2% Fibonacci level which was previous resistance for the past week and a half. Previous resistance tends to turn into support in technical analysis so tomorrows move will be telling as to whether that will hold true here. A failure to hold above the 38.2% Fib level would be bearish, but the key level to watch going forward if the pullback continues is the 23.6% Fib level as that was the last “base” formed before price broke above the 38.2% Fib. A move below the 23.6% Fib would cancel out our series of higher highs and higher lows and more than likely bring bear dominance back into the market. Current stop-losses should be placed just below the Higher Low, or base, that was formed at the 23.6% Fib level last week. A move below the 23.6% Fib would put price back into a bearish trend and increase the likelihood of a re-test of the low made on March 23rd of $18,213 with the potential for even lower lows, especially since we just had a hard test and rejection off of the 50% Fib level today.
View remains neutral for now, but will shift back to bearish if the 38.2% Fib level is broken to the downside with added bearishness if the 23.6% Fib level is violated as well. Today’s candle remained gray on the selloff which is a neutral candle, or no momentum, in my candle momentum algorithm. A further decline will likely shift the color to purple which would indicate bearish momentum has returned for price.
Price closed at $22,653 just above the 38.2% Fibonacci level which was previous resistance for the past week and a half. Previous resistance tends to turn into support in technical analysis so tomorrows move will be telling as to whether that will hold true here. A failure to hold above the 38.2% Fib level would be bearish, but the key level to watch going forward if the pullback continues is the 23.6% Fib level as that was the last “base” formed before price broke above the 38.2% Fib. A move below the 23.6% Fib would cancel out our series of higher highs and higher lows and more than likely bring bear dominance back into the market. Current stop-losses should be placed just below the Higher Low, or base, that was formed at the 23.6% Fib level last week. A move below the 23.6% Fib would put price back into a bearish trend and increase the likelihood of a re-test of the low made on March 23rd of $18,213 with the potential for even lower lows, especially since we just had a hard test and rejection off of the 50% Fib level today.
View remains neutral for now, but will shift back to bearish if the 38.2% Fib level is broken to the downside with added bearishness if the 23.6% Fib level is violated as well. Today’s candle remained gray on the selloff which is a neutral candle, or no momentum, in my candle momentum algorithm. A further decline will likely shift the color to purple which would indicate bearish momentum has returned for price.
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