Dow Jones (US30) bearish butterfly completes at 39,290
Updated
The weekly chart highlights a bearish Butterfly completing between 38,976 and 39,290. It is common practice for the furthest resistance barrier to be tested (39,290)
The intraday time frame highlights the completion of a bullish flag at 39,136.
The 8-hour chart highlights an Ending Wedge formation. Trendline resistance is located at 39,300. On a break of trendline support at 38,440 the measured move target is 37,130.
The most important factor behind this time frame is the use of Fibonacci projections and bespoke support levels. Bespoke support levels are 38,625 and 37,570. Using 39,290 as the swing high, we have a near-pip-perfect 261.8% extension to our furthest support zone.
Conclusion: although there is ample scope for further gains, the value trade is now to sell into rallies. Selling at 39,290 (confluence level), with a stop loss of 39,490 and a target of 37,570 offers a risk-reward factor of 8.6R
Resistance: 39,136 (flag), 39,290 (Butterfly), 39,300 (higher highs)
Support 38,625 (bespoke, wave 1), 38,570 (bespoke), 37,130 (wedge measured move)
Comment
Wedge breakout. Stop loss to entry
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