DOW Short Term Analysis Follow-Up; 6th June 2013

DOW Short Term Analysis Follow-Up; 6th June 2013

Here’s the follow on from the DOW charts posted earlier in the Week.

The 61.8% fib level from the April low to May high lies at 14,870 but you’ll generally find price will pierce the fib level and ultimately you want to see the hourly candle closing above it.

So to find a more realistic target you need to look to the left of the chart for areas of possible S/R and in this case there is some congestion between 14,830 and 14,855 but nothing that precisely defines support.

Therefore, the simplest way of finding probable support is to look for a perfect doji with no body. For some reason when the market is looking for support but unsure of a precise level, it will often settle for the top of a previous doji as has happened tonight – hence my 14,850 target.

If you are already long from the lows, stops will be set below tonight’s low (allowing for a double bottom that overshoots), or stops will be trailed depending on your personal strategy.

A fair upside target would be a back test of either the long term channel, or possibly a test of the falling wedge that marks the point price broke down, both of which contained within the red circle on this chart.

Note that this target will also line up with the 20 and 200 MA’s which should come together in the area of the target and add to the probability of there being resistance.

DOW 4 hourly 5th June 2013

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