DOW JONES close to a rejection zone. Bullish if it breaks.

4 thg 8, 2022

The Dow Jones Industrial Average (DJI) fulfilled our buy signal given in late June after the price made a Lower Low on its long-term Channel Down:

Right now the scene has slightly changed as the 1D RSI broke above its 8 month Resistance Zone and even though the price is now exactly on the Lower Highs (top) trend-line of the Channel Down, this may be the first sign that the trend is about to change from long-term bearish to bullish.

There is still a chance to break above the Channel Down without breaking the bearish trend as the 0.618 Fibonacci retracement level and the 1D MA200 (orange trend-line) are above it. Those are the levels where Dow got rejected last time (April 21) and started a downtrend to a new Lower Low on the -0.236 Fibonacci extension.

As a result a plan that offers excellent R/R opportunities is to sell just above the 0.618 Fib (see rejection zone) with a tight SL on the 1D MA200. Short-term target the 1D MA50 (blue trend-line), where you can short if it breaks before hitting 0.618. Medium-term target 30450. If we get that candle close above the 1D MA200 then its minimum loss on the SL and switch to a break-out buy on the long-term. In that case the short-term targets can be the previous Lower Highs (33540 and 35875).




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