Dow Jones: Technicals scream ‘buy'

Content:

The technical indicators in the DJIA remain on the 'buy' bandwagon, but the US market equity index has seen its share of false signals in the past. We look at the possible trend ahead in the Dow Jones.

Momentum:

MACD: Positive

RSI: Neutral Trend

Stochastic: Buy

Daily Price Action Trend: Negative

Last relevant high: 16,485.8

Last relevant low: 15,503.0

Comment:

Oil rallied Friday and helped drag the Dow higher (which in turn helped lift all major markets), not to look like we are repeating ourselves from the FTSE report… the way to trade this market will come down to personal preference, but let’s look at the facts:

A buy pattern has been formed, which will remain in play unless by the close of trading 15,691.5 has been broken without 15,974.0 being bettered.

We have a buy on the MACD and a new buy signal on the Stochastic, so two out of three momentum indicators are positive.

Due to the odd session on the 10th, we could argue that a break above 16,202.0 could indicate a change of trend, that is just over a 200 point upward move from here which could easily be completed in a single session.

With the Dow, we have had so many false signals in the past couple of weeks it may be tempting to simply follow this candlestick move, after all they can’t all cost money, can they?!

The technical setup is more positive than the FTSE, but it was only last week it looked as if we had the four riders of the market apocalypse on the horizon… We at tiptv are old enough to know to ignore the majority of news flow and just follow the charts but we generally agree that a gentle approach should be taken when buying into this market whilst the daily trend remains negative.