The Dow Jones in the 4-hour chart illustrates a long-term sideways structure with a potential bearish bias. The factors that make us expect a short position are:
In fundamental terms, the latest economic activity data reveal signs of stagnation. The recent ISM manufacturing PMI fell to 47.8%, the worst level since June 2009. On the other hand, the last non-manufacturing ISM reading also fell to 52.6% in September, the worst level since August 2016.
The long-term highs-and lows sequence in Dow Jones reflects that the index topped in mid-2019. After this high at 27,408 pts, DJIA develops a corrective formation which could correspond to a Flat pattern.
DJIA could reach a marginal high in the area between 27,075 pts and 27, 270 pts. However, we don't expect new record highs over 27,405 pts.
The bearish setup will activate if Dow Jones breaks down and closes below 26,750 pts.
Our first profit target (conservative scenario) is at 26,095 pts. The second target is the most probable level to be reached at 25,720 pts. And the final objective of the trade is at 25,070 pts. The final level could provide a risk/reward ratio of 2.56%
Trading plan summary
Entry Level: 26,750 pts.
Stop Loss: 27,410 pts.
1st Profit Target: 26,095 pts.
2nd Profit Target: 25,720 pts.
3rd Profit Target: 25,070 pts.
Risk Warning: CFD and Spot Forex trading both come with a high degree of risk. You must be prepared to sustain a total loss of any funds deposited with us, as well as any additional losses, charges, or other costs we incur in recovering any payment from you. Given the possibility of losing more than your entire investment, speculation in certain investments should only be conducted with risk capital funds that if lost will not significantly affect your personal or institution’s financial well-being. Before deciding to trade the products offered by us, you should carefully consider your objectives, financial situation, needs and level of experience. You should also be aware of all the risks associated with trading on margin.
Recommended Content
Editors’ Picks
EUR/USD trades weak below 1.0800 amid Good Friday lull, ahead of US PCE
EUR/USD remains depressed below 1.0800, as traders lack directional impetus amid minimal volatility and thin liquidity on Good Friday. The pair keenly awaits the US PCE inflation data and Fed Chair Powell's speech for fresh hints on next week's price action.
GBP/USD holds steady above 1.2600 as markets stay calm on Good Friday
GBP/USD trades sideways above 1.2600 amid a typical Good Friday trading lull. A broadly firmer US Dollar could keep any upside attempts limited in the pair ahead of the US PCE inflation data and Fed Chair Powell's appearance.
Gold ends Q1 2024 at record highs, what’s next?
Gold is sitting at an all-time high of $2,236, lacking a trading impetus amid holiday-thinned conditions on Good Friday. Most major world markets, including the United States are closed in observance of Holy Friday, leaving volatility around Gold price highly subdued.
Ripple's move above this key level could trigger nearly 50% rally for XRP
Ripple price has overcome a critical resistance level and flipped into a support floor on the weekly time frame. This development happened while XRP tightly consolidated for roughly 250 days.
US core PCE inflation set to ease in February on month as Federal Reserve rate cut bets for June mount
The core Personal Consumption Expenditures Price Index is set to rise 0.3% MoM and 2.8% YoY in February. The revised Summary of Projections showed that policymakers upwardly revised end-2024 core PCE forecast to 2.6% from 2.4%.