DJIA daily - time for bear pull backDJIA has found support at the BigRed level, just as I analyzed in the last report. It bounced back strongly and nicely and is now close to a resistance area. We will have to wait and see what it does next, but for now, it seems more likely to experience a bear pullback than a bullish pattern.
Volume does not confirm the price action, as it hasn't moved above 20 days average volume. Therefore, this move is considered bearish or a fake move.
The price bounced from the 200-day MA, which is a bullish sign, but it is still below the rest of the major MAs, which is bearish.
The RSI is neutral, and the MACD histogram is ticking a smaller red tick, which could be a bullish sign. The MACD line is trying to cross above the signal line, but both lines are below the zero line, so we still need to wait to determine if it is bullish.
Overall: DJIA broke down from a symmetrical triangle and found support, which is a common pattern. Prices tend to test prior support levels before continuing in the direction of the breakout, in this case, the bearish direction. The price is very close to the 20 and 50-day MAs, which will act as resistance. Additionally, there is a trendline from the symmetrical triangle, which will also act as resistance. Therefore, for bulls, they need to gather strength and break through that resistance with significant volume before I can say it is bullish and we could go up.
Otherwise, I will see this only as a textbook bear pullback after a pattern break and would call a drop below the BigRed level almost certain in the next two weeks.
The sell signal would be flipped to the buy signal only if we cross that resistance area with a strong volume.
