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The Dow Jones Industrial Average

Dow 30 Futures – Finding method in the madness

It has been a tumultuous couple of months for the DOW.

Starting from the beginning of 2018, the market has not seen such volatility in recent history.
Looking at the chart below, there is a stark difference between the price action from a number of previous years and the price action starting in February 2018.

There have been many reasons for the wild ride:

  • Spiking bond rates
  • Inflation Fears
  • Huge tax cuts
  • Raising of interest rates by the FED
  • Trade wars
  • Possible military action on Syria

I believe that all of this volatility can be explained in one, simple word… “Trump”
I am almost starting to believe that he is playing a game and trying to see how much he can manipulate the market with a single tweet, causing traders to start employing a new technical indicator “The twitter window”.

Despite all of the noise, the daily chart is still complying with technical rules. Let’s analyse the chart.

Monday’s candle saw a strong break above the downward trendline, signaling a possible break to the upside.

The first hurdle is the 50 Day Moving Average at the 24600 area, a positive move from there and we could see the price reaching the 38.2 Fibonacci resistance area at 24800.
A strong break through the 24800 area and the next target would be the 50 Fibonacci at the 25200 area.

The 50 Day Moving Average is placed firmly above the 200 Day Average, signalling a possible longer term uptrend.

A failure to break the 24800 resistance area and we could see the price revert back to the 23.6 Fibonacci support zone at 24300.

The 200 Day Moving Average has proven to be an incredibly strong support area and any rejection of this area will keep the market range-bound or on an upward trend.

Technically speaking these indicators should hold true, but let’s wait for the next TWEET…

Stanton Roux

Stanton Roux

Algotrading.co.za is a free online learning platform that merges my two passions software and trading. I like to bring a new twist to trading and show how software can improve your trading skills.