Hi Traders! Dow Jones short term forecast and technical analysis is here. The way I would like to analyze the chart for setups is based on multi-timeframe confirmations because in my POV if we get more evidences on different timeframes for the same direction then it makes the setup much more reliable. If you would like to learn more about the way we trade and the technical analysis we use then check out the Traders Academy Club Spoiler alert – free memberships are available! Let’s start our analysis from the highest timeframe which will be the H4 chart here.
Dow Jones H4(4 Hours) Chart Analysis – Strong Support Zone, Bullish Convergence, Bullish Hidden Divergence
On the H4 chart, we could see that the price which was moving lower has reached a strong support zone, respected it and bounced higher from this zone. Also, the price which was moving lower created a bullish divergence that has formed between the first low that has formed at 28819.52 and the second low that has formed at 28583.52 based on the MACD indicator. The price then moved higher and broke above the last high at 29816.02 creating higher highs, thus forming a classical setup of bullish divergence followed by bullish convergence. Hence as per the book scenario, after a bullish convergence, we may look for corrections to happen and then further continuation to the upside. Currently, it looks like a correction is happening. Also, the price which is currently moving lower has created a bullish hidden divergence that has formed between the first low that has formed at 28583.52 and the second low that has formed at 28901.02 based on the MACD indicator which we may consider as evidence of bullish pressure. So everything looks good here for the bulls and we may now move down to lower timeframe and see if we can find evidences supporting this short term bullish view.
Dow Jones H1(1 Hour) Chart Analysis – Bullish Convergence, ADX Indicator
Looking at the H1 chart, we could see that the price which was moving lower has created a bullish divergence that has formed between the first low that has formed at 29065.52 and the second low that has formed at 28901.02 based on the MACD indicator. The price then moved higher and broke above the last high at 29490.02 creating higher highs, thus forming a classical setup of bullish divergence followed by bullish convergence here as well, we may consider these as evidences of bullish pressure. Hence as per the book scenario, after a bullish convergence, we may look for corrections to happen and then further continuation to the upside. Currently, it looks like a correction is happening. In addition to this, the ADX indicator gave a bullish signal here, at the cross of +DI (green line) versus -DI (red line) and the main signal line (silver line) reads value over 25, we may consider this as yet another evidence of bullish pressure. Also, currently there are no signs opposing this bullish view. Until the strong support zone shown in the image below (marked in blue) holds my short term view remains bullish here and I expect the price to move higher further.
Technical Analysis & Forecast Summary
Dow Jones H4(4 Hours) Chart Analysis
- Strong Support Zone, Bullish Convergence, Bullish Hidden Divergence
Dow Jones H1(1 Hour) Chart Analysis
- Bullish Convergence, ADX Indicator
Trading Tips
It is always recommended to look for confirmations before you jump into any trade. If you are not sure about how to trade this short term buy setup then you can use any setup and strategy that you have in your arsenal to look for bullish moves and join this buy trade.
Also, don’t forget to protect your buy trade using a stop loss and make sure to set a target and keep a proper risk/reward ratio.
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Happy Trading!
Arvinth Akash
Traders Academy Club Team
