So looking at DOW, what does one see? It’s up, it’s down, it’s up, it’s down…. what is it really saying?
The DOW in the very short has been bullish. In the very very short term. In the long term it has been bearish. It’s at crossroads of sorts. From this point there’s not a lot of downside left. Wait, that comment requires a clarification – there’s not a lot of downside left unless we’re in for a full blown recession. And with experienced and heavy weight investors calling a bottom already and with people’s inclination to run for the quick fix, it is unlikely that much more severe downside will continue. It might put a few more lows, lower than the 7550 or higher. But it should slowly rise from here. It may have bear rallies and then fall again slowly and continue on the sideways move for a while in the long term.
What does this mean to a trader in the short term for day trading? Well, that depends on how the Monday session goes. A break and close above the blue trendline will be a short term bull sign. The next resistance will be 8845. A break and close above that might clear the path till 9260. It’s highly speculative but this might even turn out into a reverse head and shoulder pattern. But let’s not speculate for the moment. Besides that’s on the weekly timeframe.
How were these support and resistance lines drawn? Simple support and resistance. No Fibos, no pivots, or other retracements. Those are nice too. I just would like to keep things simple.
Positive divergences forming on RSI and MACD. RSI is also getting ready to cross 50. Almost at 50. These signs indicate bullish tendencies.
In addition, there’s has been much talk of the auto bailout being approved. It would appear that many politicians think it to be a somewhat catastrophic thing for an automaker to fail. So there would seem to be more in favor of the bailout getting approved.
