Dow Jones (DJI) has been trading within a 17-year Channel Up since the March 2009 bottom of the Housing Crisis. Within this pattern, it has displayed clear Bull and Bear Cycles (expansion and correction phases) with high symmetry and timing.
Three weeks ago it broke below its 1W MA50 (blue trend-line), giving the second signal that we might be on a correction phase, following the first sell signal given by the overbought 1M RSI. Every time this combination of events took place in the past 5 years, the index corrected aggressively on (or very close to) its 1W MA200 (orange trend-line).
Even before 2021, Dow had very consistent Bear Cycle corrections, as very accurately displayed by the application of the Time Cycles. All of them bottomed after hitting either the 1W MA200 or the 0.382 Fibonacci from the previous Low (or even both). At the same time, the 1M RSI always hit 47.00 before the index bottomed.
Additionally, all corrections hit at least the 0.618 Channel Fibonacci level, which along with the 1W MA200 have acted as the natural long-term Support levels of the pattern.
As a result, the recent 3-week rally that has been primarily based on news, may very well get exhausted when technicals prevail and see a strong correction towards the 1W MA200. We expect Dow to pull-back to 40500 to test both Fib 0.382 and the 1W MA200. If the 1M RSI hits 47.00 before that however, Dow will again be a strong long-term buy opportunity.
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Three weeks ago it broke below its 1W MA50 (blue trend-line), giving the second signal that we might be on a correction phase, following the first sell signal given by the overbought 1M RSI. Every time this combination of events took place in the past 5 years, the index corrected aggressively on (or very close to) its 1W MA200 (orange trend-line).
Even before 2021, Dow had very consistent Bear Cycle corrections, as very accurately displayed by the application of the Time Cycles. All of them bottomed after hitting either the 1W MA200 or the 0.382 Fibonacci from the previous Low (or even both). At the same time, the 1M RSI always hit 47.00 before the index bottomed.
Additionally, all corrections hit at least the 0.618 Channel Fibonacci level, which along with the 1W MA200 have acted as the natural long-term Support levels of the pattern.
As a result, the recent 3-week rally that has been primarily based on news, may very well get exhausted when technicals prevail and see a strong correction towards the 1W MA200. We expect Dow to pull-back to 40500 to test both Fib 0.382 and the 1W MA200. If the 1M RSI hits 47.00 before that however, Dow will again be a strong long-term buy opportunity.
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** Please LIKE 👍, FOLLOW ✅, SHARE 🙌 and COMMENT ✍ if you enjoy this idea! Also share your ideas and charts in the comments section below! This is best way to keep it relevant, support us, keep the content here free and allow the idea to reach as many people as possible. **
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I trade Crypto, Forex, Indices & Commodities on PrimeXBT — all from one account with TradingView charts 👉 tradingshot.short.gy/PrimeXBT
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I also use TradeNation for fixed spreads & zero commission 👉 tradingshot.short.gy/Tradenation
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I trade Crypto, Forex, Indices & Commodities on PrimeXBT — all from one account with TradingView charts 👉 tradingshot.short.gy/PrimeXBT
I also use TradeNation for fixed spreads & zero commission 👉 tradingshot.short.gy/Tradenation
I also use TradeNation for fixed spreads & zero commission 👉 tradingshot.short.gy/Tradenation
Exención de responsabilidad
La información y las publicaciones no constituyen, ni deben considerarse como, asesoramiento o recomendaciones financieras, de inversión, de trading u otro tipo, proporcionadas o respaldadas por TradingView. Obtenga más información en Condiciones de uso.