04 Jun Short Term DOW Analysis; 4th June 2013
Whilst I’m still hunting down my next swing trade, here’s a quick look at the Hourly and 4 Hourly DOW charts as seen from my perspective.
I’ve zoomed right in on this Hourly chart to give a better picture of the triangle breakdown.
When a triangle is retested so soon after a breakdown, it is common for price to spike back into the triangle to test the congestion zone prior to the break down.
This congestion zone includes the Hourly 200 MA, so technically today’s high looked a very good short entry.
If you apply this triangle to the 4 hourly chart, none of the candles closed inside the triangle, just long wicks were left and the bodies are all below the triangle. This adds a little weight to the triangle theory and suggested we’d see a new low…. which we now have done.
Moving to the 4 Hourly and things are a little more complex.
We have this long upwards channel, the bottom of which hasn’t been tested since April.
The 200 MA also sits below the current print and it would be worth bearing in mind that both FTSE and SPX are trading below their 4 hourly 200 MA’s.
The 50% fib of the current swing move lies a couple of pips below 15,000.
These are all good reasons supporting lower prices, targeting an ultimate level for the current swing in the 14,850 region just below the 61.8% fib which lies at 14,870
However, we also have a bullish falling wedge formation and the price contraction within the confines of this wedge prove that bulls are still in control for now.
So, although there are many signals arguing for lower prices, the main up trend is completely intact as things stand. A spike below the falling wedge to test either the 200 MA, the channel line or the 50% fib level would still do no damage to the main up trend as long as the candle ended up closing back inside the falling wedge.