Dow is consolidating Thursday’s sharp fall; near-term bias remains with bears

Slobodan Drvenica Windsor Brokers

DOW JONES

Dow Jones contract for September delivery is trading with narrow consolidation on Friday after strong fall the previous day, when the index was down 1.3% in the biggest one-day fall since 17 May.
Strong sell off on Thursday signals that investors are strongly concerned about President Trump’s administration ability to move forward with its economic agenda.
Technical outlook for Dow is weaker after the second strong fall in past two weeks, as the second leg of pullback from new record high at 22131 has completed failure swing pattern on daily chart, signaling further easing.
Thursday’s long bearish daily candle weighs heavily, along with rising bearish momentum and Thursday’s close below pivotal support at 21752 (Fibo 38.2% of 21138/22131 upleg.
Oversold near-term studies suggest further consolidation, with broken 20SMA (21856) expected to ideally cap and extended upticks to be limited by daily Tenkan-sen at 21911.
Fresh extension of bear-phase from 22131 through yesterday’s low at 21690, would look for targets at 21635/21517 (Fibo 50% / 61.8% of 21138/22131) and may stretch towards top of rising and thickening daily cloud at 21404.
Conversely, sustained break above daily Tenkan-sen 21911 would ease bearish pressure, while bounce above lower top at 22066 is needed to confirm an end of corrective phase and turn focus higher.

Res: 21774; 21856; 21911; 22066
Sup: 21690; 21635; 21517; 21404

Author

Slobodan Drvenica

Windsor Brokers

Industry veteran with over 22 years’ experience, Slobodan Drvenica joined Windsor Brokers in 1995 when he was an active trader for more than 10 years, managing the trading desk and own account departments.

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