2016-07-29 16:07:13

Review and dynamics
The rise in the U.S. stock indexes has suspended after the rapid growth since the beginning of the month. After reaching the new record highs at the level of 18620, the index DJIA started to go down and is now close to yesterday's and monthly lows near the level of 18370, which is close to the lower line of the ascending channel on 4-hour chart.

Our opinion
On the monthly and weekly charts the indicators OsMA and Stochastic give signals to buy, on the daily and 4-hour charts the indicators give signals for short positions.

In the case of breakdown of the level 18370 the pair may go down to support level of 18170 (ЕМА200 on 4-hour chart). Technical analysis shows that the correction can continue to support level of 17920 (Fibonacci 23.6% to the rise in price from the level of 15660 in February after the significant decline at beginning of the year).

As long as the price of DJIA is above levels of 17600 (ЕМА200 and the lower line of the ascending channel on the daily chart) and 17490 (Fibonacci level of 38.2%), the change to the uptrend is unlikely.

It is likely that the pair will undergo short-term correction to 18170 or 17920, which may last until the meeting of the US Fed on 20-21 September.

Traders shall carefully watch the signals of the indicators OsMA and Stochastic on the daily and 4-hour charts. If the indicators reverse and start to give signals to buy, long positions will be advisable.

Despite possibility of the correction, positive dynamics continues.

A lot will depend on investors' risk appetite and also on the monetary policy of the US Fed. If the Fed’s rhetoric about the interest rates remains soft and the US macro-economic data continues to be positive, the American indices, including the Dow Jones Industrial Average, will continue to rise.

Otherwise, the pair can break out support levels of 17600 and 17490 and go into the uptrend.

Support levels: 18370, 18170, 17920, 17600 and 17490.
Resistance levels: 18450, 18500 and 18620

Trading tips
Buy Stop: 18545. Stop-Loss: 18360. Take-Profit: 18600 and 18700.
Sell Stop: 18360. Stop-Loss: 18480. Take-Profit: 18170 and 17920.

At the record highs
At the record highs

Breakout of the level of 18370 is possible
Breakout of the level of 18370 is possible