So, we got the dip everyone was waiting for – question is, has anyone bought it?
The fact is U.S Indices are still range bound.
Mid December to present shows a triangle on the DOW Daily chart.
Whilst Triangles are normally continuation patterns, this triangle is far from fully formed.
If the trend has reversed and is now up, then tonights close was a perfect buying opportunity.
There are plenty of reasons to be afraid of buying just as there are to be afraid of selling.
However, on the basis that tonight’s close has potential to be a good buying opportunity if the trend is going back up, I’ve just bought DOW at 17,650 with 105 point stop loss. Its a small trade at £1 and I’m comfortable with the projected loss based on the potential reward if the trend is now up. 17,570 to 17,600 should be support if there are buyers around. A daily close below that level on Monday wouldn’t look good for bulls.
If the trend is down, there will be plenty of good selling opportunities to come.
The stats for buying the 3rd close after 3 days down in a row are bullish. However, Monday has been down 5 of last 7, or down 13 of the last 19.