DOW JONES invalidating bearish patterns, targeting 34000 again.The Dow Jones Index (DJI) closed yesterday above its 1D MA50 (blue trend-line) as it is extending the rebound we called on our previous analysis:
As you see, that rebound came exactly on the Higher Lows trend-line that started on the June 17 Low and was the second (July 14 the first) time it held, making it the short-term Support. What Dow achieved with that 1D candle close above the 1D MA50, is to invalidate the February 24 - April 28 2022 fractal, which by that time was similar but failed to break and close above its 1D MA50 and eventually got sold aggressively.
What makes the current rebound potentially having a long-term effect is 1) the 1D RSI rebound on its multi-year Oversold Zone and 2) the Bullish Cross on the 1D MACD, which within 2022 always delivers at least a +8% rebound. Such % rise would be the test of the 1D MA200 (orange trend-line), which is our medium-term target. As mentioned numerous times before, in order to commit to long-term buying we would like to see the index close above the 1D MA300 (yellow trend-line) first, which provided the rejection on the August 16 High.
So far the medium-term trading strategy is to buy every pull-back on the Higher Lows trend-line/ RSI oversold zone. A break below that level, we'll consider a bearish signal, targeting the 1W MA200 (red trend-line).
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Dowsignals
DOW JONES hit the Higher Lows line. 1D RSI oversold.The Dow Jones Index (DJI) is on its 7th straight day below the 1D MA50 (blue trend-line) having fallen almost -10% since its August 16 High caused by the strong rejection on the 1D MA300 (yellow trend-line). The price has hit today the Higher Lows trend-line that started on the June 17 Low and had one more contact on July 14.
This is the only Support level that stands before a potential June 17 Low re-test, which is also where the 1W MA200 (red trend-line) is currently at, the index' natural long-term technical Support. As long as the Higher Lows hold, we can expect sideways trading within that trend-line and the 1D MA50. If the latter breaks, consider it a buy break-out signal targeting the 1D MA300 again or at least the 1D MA200 (orange trend-line) which was hit both on the June-Aug and Feb-March rallies. If the June Low and 1W MA200 break, then we can expect a new Lower Low around the -0.236 Fibonacci extension, as the May 20 Low did.
On a short to medium-term perspective, this is a buy opportunity as the 1D RSI is touching the Oversold zone that has been holding since the 2020 COVID crash. As you see, every direct hit in the Zone has delivered a rebound of at least +8.00%.
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DOW JONES on the 2008 crash fractal and how it avoids it. I've made many comparisons of Dow Jones' (DJI) 2022 Bearish Price Action with past Bear Cycles but being near closing its 3rd straight red 1W (weekly) candle since the August 15 rejection on the 1W MA50 (blue trend-line), it is time to update it.
As you see, this is a comparison of Dow's 2021/2022 chart against 2007/2008. The dynamic factor is WTI Oil (black trend-line). As you see in July 2008 Oil peaked while the index had already started it's correction inside the new Bear Market. Dow's 1W MA50 rejection was followed by a sharp sell-off below the 1W MA200 (orange trend-line) where the 1W MA50 crossed below the 1W MA100 (green trend-line) to form a Bearish Cross. The time that the index reached the 1W MA200 from its Market Top was 37 weeks (259 days).
At the moment the 2022 fractal looks to be following closely the 2008 sequence. If we exclude the fundamental extreme of the peak of the Ukraine - Russia war when Oil registered its peak (March 2022), its technical normalized top was in June 2022 right when Dow rebounded just before hitting the 1W MA200. See how even the 1W RSI sequences are identical so far. What this indicates is that Oil can continue dropping as the Fed attempts to lower an out of control inflation, but still stocks can fall along with it, just like it happened from mid 2008 to early 2009.
As a result, the 1W MA50 rejection seems so far consistent with mid-phases of a Bear Cycle. Fundamentally, a big factor that is not consistent with the 2008 fractal is the strong labor market we're currently at, with the Unemployment Rate (teal trend-line) still on market lows as opposed to the 2008 fractal, which by the 1W MA50 rejection in May 2008, it was already rising aggressively. This means that technically, a weekly candle close above the 1W MA50 can be regarded as an invalidation of the Bear Cycle fractal. Also the 1W RSI printing Higher Highs can be taken as such.
What do you think will happen next? Can Dow close above the 1W MA50 or August's rejection will hit the 1W MA200 as per the 2008 fractal?
P.S. Because the chart has the added elements of WTI Oil and the Unemployment Rate plotted and pinned to scales B and Z, it is not constant and may appear distorted based on your screen's/ browser dimensions. The original looks like this below, so if yours doesn't, adjust the vertical/ horizontal axis in order to make it look like this and better understand what is illustrated:
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DOW JONES holding the 1D MA50 in a repeat of the COVID recovery!The Dow Jones Index (DJI) hit the 1D MA50 (blue trend-line) yesterday and today shows the first signs of recovery. The drop from the August 16 High has been substantial, almost -7% but so has the rise since the June 17 low (more than +15%), so profit taking was natural, especially since the High exceeded the 1D MA200 (orange trend-line). The first Resistance on the short-term is the 1D MA100 (green trend-line) which is being tested at the moment.
On the long-term though, this pull-back to the 1D MA50 after such a strong rally, resembles the initial recovery of March - June 2020 from the COVID crash. Especially considering also that the RSI and MACD on the 1W time-frame have been printing identical patterns, with the MACD being on a Bullish Cross since July 27 as it did on May 22 2020!
From June 15 2020 to July 21 2020, the 1D MA50 held as Support four times and it catapulted Dow to the 1.15 Fibonacci extension. A repeat of that pattern sets the current medium-term target exactly on the 35000 level. Notice also that as on June 23 2020, Dow is currently close to having the 1D MA50 cross above the 1D MA100, which is a Bullish Cross formation and that would be the first time since then!
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DOW JONES rejection finding Support soon.Exactly 2 weeks ago on our last Dow Jones (DJI) analysis we stated that the price had entered a possible rejection zone (red) and unless it closed a weekly (1W) candle above the 1D MA200, we would get a pull-back:
Well as it turned out the index closed last week below both the 1D MA200 (red trend-line) and the 1W MA50 (blue trend-line), which are very close to each other, and got a considerable rejection this week. The price is now approaching the critical Support cluster that consists of the 1D MA100 (green trend-line) and the 1D MA50 (yellow trend-line). The chances of getting a new bounce are high as not only are wee on a 1W MACD Bullish Cross since late July but also the 1D MA50 is about to cross above the 1D MA100, forming a Bullish Cross. Last time that happened was on after the June 15 2020 1W candle, which was the first recovery from the March 2020 COVID crash:
As you see, the 1D MA50 and 1D MA100 held as Support levels and Dow was able to sustain a solid rise. Technically there is no reason not to expect a similar development but in order to technically claim that the index is back onto the long-term bullish trend we need to see a weekly candle closing above the 1D MA200.
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DOW JONES rejected on the Golden Ratio. What's next?The Dow Jones index (DJI) broke above its 1D MA200 (orange trend-line) early this week but got rejected on the 0.618 Fibonacci retracement level (from its January 05 All Time High (ATH)). Failing to hold the 1D MA200 as a Support, can result into a short-term pull-back to test the lower Fibonacci levels (0.5 and 0.382) as well as the 1D MA100 (green trend-line) and 1D MA50 (blue trend-line) as Support.
This short-term technical correction, shouldn't change the long-term trend-line, which after the huge 1W RSI bounce and the +15% rally since the June 17 low, has turned bullish. Even fundamentally, this market rally was supported by the first significant retrace on the Inflation Rate (black trend-line) and coincided exactly with the top on the US10Y (teal trend-line). So as you see, the rally had strong fundamental drivers, especially the US10Y, whose late sustainable rise since August 01, seems to worry the stock markets. A new peak there, can mark the new low on Dow.
Also, notice that all prior 1D MA200 break-outs since February 01, failed to create a sustainable continuation and if we connect those tops with two trend-lines, we can see the solid technical Resistance that Dow Jones needs to overcome in order to be able to post a sustainable bullish trend long-term into the new Bull Cycle.
P.S. Because the chart has the added elements of the US10Y and Inflation Rate plotted and are not constant, it may appear distorted based on your screen's/ browser dimensions. The original looks like this below, so if yours doesn't, adjust the vertical/ horizontal axis in order to make it look like this and better understand what is illustrated:
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DOW JONES has formed a 2018/2020 type bottom.The Dow Jones Industrial Average Index (DJI) made the first bullish step as we outlined last week by breaking above its 1D MA50 (yellow trend-line) and is currently just below the 1D MA100 (red trend-line) and 1W MA100 (green trend-line). In the process it has made the exact same build up as the COVID bottom and subsequent recovery but let's see into this in more detail.
First and foremost, it achieved this week the 1W MACD Bullish Cross. It is the first such formation below the 0.00 level since May 18 2020 and January 28 2019. Those were the Bullish Crosses that followed the COVID crash and U.S. - Chine trade war bottoms respectively and took the index into the early recovery steps. On top of that, it broke above a Lower Highs sequence on the 1W RSI that was holding since November 01 2021.
Moving on to the MA periods, we can see than during the COVID crash, when the 1D MA50 crossed below the 1W MA100, the bottom was formed. That is also the case with the current correction as the same 1D MA50/ 1W MA100 Bearish Cross has so far formed a low on the June 13 1W candle. Back again to the COVID crash, when the 1D MA100 crossed below the 1W MA100, the index was consolidating preparing for a strong rise above the 0.786 Fibonacci retracement level. On today's correction, we are just after this Bearish Cross, with the index already on two straight (very strong) 1W green candles.
We can see that even in January 2019, the index had a similar consolidation within the 1D MA50 and 1D MA100 before a break above the latter pushed Dow Jones aggressively above the 0.786 Fib. In both sequences, all this happened after a 1W MACD Bullish Cross (as we have today), while the 1D MA50 was holding as a Support.
Even though the pattern since the start of the year is a Channel Down within a Bearish Megaphone, with the 1W MA50 (blue trend-line) located exactly on the Megaphone's Lower Highs (top) trend-line, we do have an excellent framework to work projections based on MA break-outs, modelled out of the similar 2018/ 2020 patterns.
This time the 0.786 Fib is around 35250 and this is our target for the end of Q3.
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DOW JONES repeating the doom fractal of 2008??This analysis on the 1W time-frame illustrates the Dow Jones Industrial Average (DJI) on the log scale. The emphasis is on the comparison of this year's correction with the Subprime Mortgage Crisis that started after the October 2007 peak and bottomed in March 2009.
As you see so far this year's correction has been following the fractal extremely closely. Emphasis is given on the fact that at the moment we seem to be at the point where the price is rebounding after near contact with the 1W MA200 (orange trend-line) similar to March 2008. If we get a rejection on the 1W MA50 (blue trend-line) by the end of the Summer, then the fractal will get most likely confirmed and a 1W MA50/100 Bearish Cross after a break below the 1W MA200, can initiate the final and most aggressive part of the index collapse. That may take us to levels not see since early 2016.
Now of course that comparison alone can't form any trading strategies but could be used as a long-term benchmark for entering/ exiting on time. Even the 1W RSI sequences are so far identical as the sentiment of realism vs denial certainly seems to be in the early 2008 levels.
Food for though for sure. What's your opinion?
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DOW JONES rejected before the 1D MA50. Double Bottom possible.The Dow Jones index (DJI) has had a strong red 1D candle yesterday right before attempting a test of the 1D MA50 (blue trend-line), which is the short-term Resistance. As you see the long-term pattern has been a Channel Down since the January 05 high. This formation has enabled us to accurately identify and trade the Highs and Lows as you can see from the two most recent analyses below:
With some adjustments made, we can now see just how closely the recent short-term rebound follows the previous Lower Low formation on February 24. That sequence had a rejection before a 1D MA50 test and eventually made a Double Bottom before the rally to the Lower Highs (top) trend-line of the Channel Down started. As a result it is possible to see this 1 week correction stop near 29680 and then rebound towards the 0.618 Fibonacci retracement level.
The 1W MA200 (red trend-line) is right below the Channel Down and as we've mentioned numerous times on our Channel is the long-term market Support. Breach of that level with a weekly candle closing should immediately test the -0.236 Fib extension and then pursue lower targets on the weekly from there. If that happens we'll follow up with extensive updates.
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DOW JONES Consolidating below the 1D MA50 for a weekDow Jones (DJI) eventually rebounded at the bottom (Lower Lows trend-line) of its long-term Channel Down, since our last analysis that indicated a sold R/R ratio for going long:
Since the end of May though, the index has failed just before a 1D MA50 (blue trend-line) test and turned sideways below that level. This is similar to the last Lower High formation on the Channel Down, as shown on the previous analysis.
Technically, as long as the price remains below the Lower Highs trend-line, it is a sell (on a tight SL of course) opportunity towards the 30650 Support and if that breaks, towards the -0.236 Fibonacci extension around 29500.
Even in the event of a break-out, we still can't call a long-term bullish reversal as the range within roughly 34150 - 35540 is a Neutral Zone (we can apply tight scalping strategies there) as late March - late April showed. Only with a weekly candle close above the 35875 Resistance, we can assume that Dow has resumed its long-term bullish trend.
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DOW JONES Bullish on Higher Lows but mind fractal continuationThe Dow Jones index (DJI), eventually fulfilled the selling sequence of January's fractal which I mentioned as possibility on my last analysis:
The index is now very close to the Higher Lows trend-line of the February 24 Low and even though the January fractal hints to more selling, if the Higher Lows hold, I expect a rebound towards the 0.618 Fibonacci retracement level at around 34350, as in Jan. A 1D candle close below the Higher Lows though, keeps the fractal intact and we can see the 32240 Support being tested, even a new Lower Lows trend-line towards the -0.236 Fibonacci extension but for this very pessimistic scenario, a strong bearish catalyst is needed, but it's often found during earnings seasons.
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DOW JONES key levels to watch that will determine the trendDow Jones has been trading within the 1D MA200 (orange trend-line) and the 1D MA50 (blue trend-line) for the past 5 days. The rejection from the March 29 High came despite closing above the 1D MA200, on a move that caught the market off guard.
So far the price action resembles the blow-off top of January 05, which ended in a violent selling sequence. However this can be invalidated if the 0.382 Fibonacci retracement level (around 34000) holds, which is the new Buy Zone as mentioned on my previous analysis. If it holds, I expect Resistance 1 (35400) and Resistance 2 (35875) to be tested. If not, the January pattern will be confirmed and should test the Higher Lows trend-line of the February 24 bottom.
Short-term traders can keep scalping by taking advantage the 1D MA200 - MA50 range for short-term profits.
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DOW JONES testing the top of its Channel and 1D MA50My last Dow Jones update on the 1D time-frame was on a fractal comparison between the Ukraine - Russia war and the 2018/19 U.S. - Chine trade war:
So far it looks like the fractal works out quite well and may have a potential bottom. However as the index has come its closest to the 1D MA50 (blue trend-line) since February 10, it is time to look into today in more detail, as a rejection may invalidate the bullish case.
As the chart shows, the dominant pattern is a Channel Down, meaning that the sentiment remains bearish. If the price gets rejected somewhere within the Resistance of the 1D MA50 and the top of the Channel Down (its Lower Highs trend-line), then most likely we will revisit the 32240 Support and potentially even a Lower Low on the -0.236 Fibonacci extension.
The 1D MA200 (orange trend-line) is also a Resistance, having a rejection on February 16. Practically, a clear buy is only a break above the 35150 Resistance (1), which will set in motion a test of the 35875 Resistance (2). See how those two Resistance levels match exactly the 0.618 and 0.786 Fibonacci retracement levels respectively.
At this point we have to mention that the 1D RSI is about to break its Lower Highs since November, giving an extra edge to the bullish case. Also note that the RSI is showing a hidden Bullish Divergence as it has been on Higher Lows since January 21 as opposed to the Lower Lows of the price action.
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DOW JONES enters decade long volatility when inflation happensThis is a long-term macro-economic chart on the 1M (monthly) time-frame, displaying Dow Jones (top chart) and the U.S. inflation rate (bottom chart). An interesting, yet alarming, correlation can be found on a decade-long horizon by comparing those two.
As you see, the three previous times that the inflation rate made a Higher Highs pattern, Dow entered a +10 year consolidation phase of very high volatility where at least once, the 1M MA200 (orange trend-line) was touched. Interestingly enough, those decades coincided with the biggest wars after WW1. If this is indeed a pattern to follow, could this mean that the new volatile decade ahead will be marked by yet another big war (the Russia - Ukraine perhaps)? Will the 1M MA200 be hit again before 2030? History certainly seems to agree.
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US30 strongly brearishUS30 has just broken the support line and is likely start a new downtrend as we have seen long-term consolidation above. the current price action is highly brearish.
DOW JONES The RSI on 1D and 1W signal rally ahead.This is Dow Jones on the 1D time-frame. The price made a bottom just before the 33040 Support of the June 21 2021 Low and is rebounding, about to test the 1D MA200 (orange trend-line) as a Resistance.
Below the chart, I've placed the RSI both on the 1D and 1D time-frames. On 1D, the RSI hit the multi month Support and rebounded and on 1W it hit the bottom of a 5 month Channel Down and rebounded. All these indicate that the market has formed a bottom and is at the early stages of a rally towards the Higher Highs trend-line. My target is just below the 1.236 Fibonacci extension at 37000.
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DOW JONES could enter an accumulation cylinder if the MA50 holdsEverything went according to plan since my last update on Dow Jones as we accurately caught the December 20 bottom and today the 37000 target has been almost hit, so it might be a could idea to book medium-term profits:
I have to update our outlook now as a new pattern may emerge as per the late 2020 price action. That is an Accumulation Cylinder (as per Livermore's speculative model) that technically leads to a new High. The technical condition for this to arise is for the 1D MA50 to hold. In fact there are so far many similarities with November 09 2020, which was when the last Accumulation Cylinder took place:
a) The price is near the 0.236 Fibonacci extension. It was at that level that the rise stopped, the price took a relief break but the 1D MA50 held and the cylinder started.
b) The Ichimoku Cloud squeezed right before the Cylinder started.
c) Both rises that preceded the Cylinder started on a 1D MA200 (orange trend-line) rebound
d) Both were at the end of a long-term Channel Up.
e) The sequence that completed the Channel Up and started the Cylinder was a Zig Zag Higher Highs/ Higher Lows displayed by the bold black arrow.
On the other hand, if the 1D MA50 fails, we should most likely see an extension of the Channel Up. In that case Dow should hit at least the 1D MA200. Basically the most optimal buy entry in the past 6 months within the Channel Up has been the 1D RSI's Buy Zone (green zone).
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DOW JONES hit the 1D MA200. Buy fractal spotted.Dow Jones has had a very sharp two-day pull-back, which hit today the 1D MA200 (orange-trend-line). That came off an Inverse Head and Shoulders pattern (IH&S) that continues to resemble that of June - July. With the 1D RSI hitting the Symmetrical Support level of the July 19 low which initiated the strong rebound to the 0.236 Fibonacci extension, I expect the same sequence to be replicated and hit 37000 by the end of next month.
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DOW JONES and the fractal of DOOM it should avoidDow Jones has been trading inside a Channel Up since the Q2 of 2021 a time during which I have been bullish buying every Higher Low within the pattern. This hasn't changed, especially after it recently made a strong rebound exactly on the 1W MA50 (blue trend-line), which during long-term uptrends is typically the major Support.
However with this analysis I want to bring to your attention, a technical possibility based on the charts, which shows that DJI's long-term bullish trend may not have more than another quarter left before a major correction occurs.
As you see on this chart, which is on the 1W (weekly) time-frame, while the index has been on this Channel Up (Higher Lows and Higher Highs), its very RSI indicator has been trading on a Channel Down (Lower Highs and Lower Lows) for the same time-span. This constitutes a Bearish Divergence and technically indicates that the dominant trend (i.e. the uptrend) has been losing its earlier strength.
Now we come to the major part of the analysis. On top of that Bearish Divergence, which is alarming on its own, the last time a similar Channel Up has been spotted was from February to November 2019. As you see there is almost a perfect symmetry between the two both in terms of the Fibonacci retrace and extension levels, as well as the bounce on the 1D MA50 and below the 0.5 Fib at the exact same spot on the Channel Up pattern.
This correlation suggests that, assuming the pattern replicates almost the same way, when the Channel Up breaks to the upside (i.e. above its top/ Higher Highs trend-line), a top might form soon after (a month or so), and as the index will get massively overbought, a sharp quarterly correction may follow. Now of course back in Feb-March 2020 the sole driver/ catalyst behind this massive correction was the COVID pandemic outbreak and an event like that can't be repeated that soon, however the markets tend to find and capitalize on any fundamental catalyst they can find at a given time in order to fulfil a long-term re-occurring pattern.
What do you think? Should this ring a bell early on for the global stock markets or not?
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DOW JONES may give more buy opportunities on this patternThis is an update to my most recent Dow Jones idea that gave the buy signal on the bottom of the Channel Up a week ago:
The index has been rallying aggressively since then and now faces the first important Resistance (black dashed line). This may be an Inverse Head and Shoulders pattern similar to the June one. That has given two buy opportunities on the 1D MA50 (blue trend-line)/ 0.5 Fibonacci retracement level and the 0.618 Fibonacci retracement level before the final rally of that phase towards the 0.236 Fibonacci extension.
If you didn't catch the bottom buy already, be on the look out for those potential buy opportunities.
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DOW JONES Buy opportunity on the 1D MA200 and 0.618 FibPattern: Channel Up on 1D.
Signal: Buy as the price reached both the 0.618 Fibonacci retracement level as well as the 1D MA200 (orange trend-line). The last parameter to fulfil is the RSI Support, so allow margin for one last low at the bottom of the Channel Up.
Target: 36500 (Resistance and All Time High) and 37000 in extension (Higher High of the Channel Up).
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The Solomon Number of US30USD (DOWJONES)The Solomon Number of US30 is: 35740
Instructions:
A- Every DECREASE in price is an opportunity to BUY. The Target is Solomon Number 35740.
B- Once the Solomon Number is touched the analysis is no longer valid to enter OR take long again.
D- Apply proper risk management according to your balance.
1st short entry@ now
TP@ 35740
DOW JONES approaching the 1D MA50Following the new top on the Higher Highs trend-line of the multi-month Channel Up, the index got rejected and has been pulling back since. It is approaching the 1D MA50 (blue trend-line) which serves as a technical medium-term Support. If it holds then I expect a strong rally towards the 0.236 Fibonacci extension setting a personal target at 37000. See how the 1D RSI is also near its multi-month Symmetrical Support.
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