Review and dynamics
Following significant rise in the index after the election of a new President in the USA, last week the index DJIA had been in the narrow range and increasing by 0.1% at the end of the week. Note that a week before that the rise in the index was 5.4%, which was the highs since December 2011.
With the opening of today’s trading session the index DJIA continues to rise. Now the index is near the closing price of last week at the level of 1885, which is above the summer highs, at the level of 18620.
On the weekly chart the upper limit of the descending channel has been broken out at the level of 18860. The index DJIA is above the key support levels of17920 (Fibonacci 23.6% after the rise from the level of 15660 in the uptrend this February after the decline since the beginning of the year), 18025 (ЕМА200 on the daily chart) and 18150 (ЕМА144 on the daily chart).
On the weekly and monthly charts the indicators OsMA and Stochastic give signals for long positions, while on the daily chart the indicators give signals for short positions, showing probability of the short-term decline in the downward correction.
The nearest targets are support levels of 18620 (annual highs) and 18450 (ЕМА200 on 4-hour chart).
Nevertheless, uptrend continues. The American economy is strong, which is proved by the positive macro-economic statistics. Despite probability of the interest rate hike in December, the rise in the U.S. stock market can continue.
As an alternative scenario the index may go back below 18450 and continue to decline in the descending channel on the weekly chart. Downtrend will start only after breakdown of the level of 17920.
As long as the index DJIA remains above the level of 18620 uptrend will continue in the short and medium-terms.
Support levels: 18620, 18450, 18150, 18025 and 17920.
Resistance level: 18970.
Buy Stop: 18915. Stop-Loss: 18810. Take-Profit: 18990 and 19100.
Sell Stop: 18810. Stop-Loss: 18900. Take-Profit: 18620, 18450, 18150, 18025 and 17920.
Breakout of the upper limit of the channel
Indicators give sell signals