As noted in a previous post, DJIA Index and the markets around the world (including the Romanian stock market) had a relief rally. As indicated in the mentioned post, the rally ended in the 12.700 points area (the base of the big triangle or head and shoulders formation which had been broken and the last Fibonacci retracement level of the last drop) in DJIA Index where the downtrend returned to its course.
As we can see in the chart above, the index already retraced almost 61.8% of the relief rally and it is oversold short term. The ADX readings (27) indicate a feeble bearish trend on daily charts which gives us hints of range trading ahead between the January lows around 11.600 and the 12.700 resistance area. Any break above 12.700 area gives scope for testing the SMA200 and then the downtrend line above.
In a bigger picture, due to the strong bearish sentiment, on a weekly chart (above) we see a potential support around the uptrend coming from 2004, when (and if) the base of the range fails (the January lows). If the above uptrend fails, the downtrend may pick up speed towards the 2004 lows around 10.000 points (as noted in the monthly chart below).
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