Hi Traders! Dow Jones short term forecast update and follow up is here. On October 12th 2022 I shared this “Dow Jones Short Term Forecast And Technical Analysis” 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 Traders Academy Club. Spoiler alert – free memberships are available!
My Idea
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.
Dow Jones H1(1 Hour) Chart Current Scenario
On the H1 chart, based on the above-mentioned analysis my short-term view was bullish here and I was expecting the price to move higher further until the strong support zone holds. The price action followed my analysis exactly as I expected it to here. The price moved lower, reached the strong support zone, created a false break of it and then it moved higher further and provided an amazing move to the upside!
On the H1 chart, the market provided us with various facts supporting the bullish view. The price which was moving lower created a false break of the strong support zone with a bullish divergence between the first low that has formed at 29065.52 and the second low that has formed at 28625.52 based on the MACD indicator. In addition to this, the price then moved higher and broke above the most recent downtrend line. We may consider these as facts provided by the market supporting the bullish view. Then as you can see in the image below how the price moved higher after that and provided an amazing move to the upside.
(Note: You can learn about a Killer Forex Strategy “Double Trend Line Principle” here)
So, traders, this is why I wanted to show this example to help you understand how important it is to follow the facts. The facts were supporting the bullish view here and there were no signs against it. When the facts do happen as we expected you can see how the price perfectly moved as per the plan. Because these are the kind of hints the market provides us at majority of the times and it’s our obligation as traders to be able to listen to these things that the market tells us and we should try to make the right actions.
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Happy Trading!
Arvinth Akash
Traders Academy Club Team.
