Hi Traders! Dow Jones short term forecast update and follow up is here. On February 14th 2024 I shared this “Dow Jones Technical Analysis And Short Term Forecast” post in our blog. In this post, let’s do a recap of this setup and see how it has developed now. If you would like to learn more about the way we trade and the technical analysis we use then check out the Home Trader Club. Spoiler alert – free memberships are available!
My Idea
On the H4 chart, the price which was moving higher reached a strong resistance zone, respected it and bounced lower from this zone. Also, we have a bearish divergence that has formed between the first high that has formed at 38139.30 and the second high that has formed at 38953.70 based on the MACD indicator which we may consider as evidence of bearish pressure. Also, the price which is moving lower has broken below the most recent uptrend line which we may consider as another evidence of bearish pressure. In addition to this, the ADX indicator gave a bearish signal here as well at the cross of -DI (red line) versus +DI (green line) and the main signal line (silver line) reads value over 25 which we may consider as yet another evidence of bearish pressure. Also, based on the Heikin Ashi candles we can see that currently, we have strong bearish bodies in downward moving market conditions so it basically reflects a bearish environment. So everything looks good here for the bears and until the strong resistance zone (marked in red) shown in the image below holds my short term view remains bearish here and I expect the price to move lower further after pullbacks.
Based on the above-mentioned analysis my short-term view was bearish here and until the strong resistance zone holds I was expecting the price to move lower further after pullbacks. The price action didn’t follow my analysis here and this idea failed. The price moved higher and provided a short move to the downside but then the price moved higher further and reached the strong resistance zone but the price didn’t hold in this zone as I expected it to. The price then moved higher further and we got a valid breakout above this strong resistance zone thus invalidating this short-term bearish view. My current view on Dow Jones is neutral.
So, traders, this is why I wanted to show this example to help you understand why we should always trade based on the facts and hints provided by the market and take the right actions according to that. Even though we had various facts supporting the bearish view here, the price didn’t hold in the strong resistance zone as I expected it to and broke above it, which is a contradictory sign provided by the market opposing the bearish view. Also, you should keep in mind that losses are part of trading we can’t expect every trade to go as per our plan and provide us profits. In trading, we can’t avoid losses but in order to be successful in trading, we should know how to cut losses early and how to manage the trade when the price goes in the opposite direction.
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Happy Trading!
Arvinth Akash
Home Trader Club Team.
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