Technical perspective on Dow
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The weekly Dow Jones Industrial Average chart shows a bullish market structure. Every major high and low is higher than the previous ones, and the Dow has retraced over 61.8% of losses from the 2007-2009 bear market, indicating a strong upward move. The downtrending line was broken almost a year ago and the index has remained above it. Immediate resistance levels are at 11,900-12,000, 12,300-12,500, and 13,100-13,300. The trend remains bullish as long as the Dow stays above 10,700, which is the major support level.
Technical perspective on Dow
- 1. DOW: WEEKLY CHART- SHOWING THE STRUCTURE OF THE MARKET Having a clear understanding of market structure helps to distinguish information from noise and a I have used a weekly chart to explain it. Following points to be noted: • Every major high and every major low is higher than its previous high or low – A sign of bullish structure. • Dow has retraced MORE than 61.8% retracement of the entire bear market decline of 2007-09- Strong up move. • Down trending line has been taken out almost 8-10 months back and index has never been below that since then – Bullish. • Immediate RESISTANCE is defined by the coloured trend lines I marked on charts. 1st is maroon horizontal line of 11,900-12,000, the level from where the major capitulation of 2008 occurred. 2nd is 12,300-12,500 defined by the red trend line. 3rd is the green trend line around 13,100-13,300. • Major Support: For the bullish trend to be intact it should not fall below 10,700. Conclusion: TREND IS BULLISH AS LONG AS PRICES DO NOT FALL BELOW 10,700. Regards, ANINDYA BANERJEE – anindya@kshitij.com