DOW JONES INDUSTRIAL AVG INDEX--A TECHNICAL VIEW---26-9-2015

DOW JONES INDUSTRIAL AVG INDEX

CLOSED AT 16314 ON 25-9-2015.

SUPPORT:- 16016.36 / 15979.95 / 15855 / 15703.79 / 15370.33 / 15340.69.

RESISTANCE:- 16333.78 / 16669.97 / 16933.43 / 17037.76 / 17067.59 / 17262.37.

Dow looks hugely bearish on the technical chart and as of now it seems that it will seek lower levels on a steady basis in coming days, weeks and months but in between short up rally could be there from time to time. Please note that any significant change in price movement can change the direction of the trend, therefore chart has to be viewed on regular basis for correct and timely assessment for the change in direction of the trend. There are some important technical observations which are given here under and the under noted parameters would drive the Dow movement for the coming weeks and months.

A TECHNICAL SNAPSHOT

1.It is running below all its long term moving averages and the range for the same is between 17763-17264(it changes every day) and it is far below this range now. To regain the lost up momentum it has to move above the upper band of the range and sustain. If it moves above the lower band of the range and sustain then it will start showing some strength.

2. Its long term moving average range on the weekly chart is between 16596—15175(it changes every week) and now it is below its upper band of the range which indicate tremendous weakness. If it slips below the lower band and sustain then the fall will accelerate.

3. RSI is showing huge negative divergence on the weekly and monthly chart as of now, which is a bad sign. But it has to be reviewed from time to time and seen in sync with the other technical parameters. If it comes into play then it will create havoc in coming weeks and months, chances of which looks reasonable as of now.

4. It is running below its long term rising trend line drawn from the bottom of 6469.95 it made on 6-3-2009 and connecting the bottom of 10404.50 it made on 4.10.2011. This would at 16740 for the month of October 2015.Since it is running below 6-1/2 years drawn trend line it speaks of great weakness.

5. its last year’s low was 15340.69 and it came very close to it this year and hit a low of 15370.33 on 24.8.2015 but managed to hold last year low. However it still exhibit weakness and in all likelihood last year’s low will be taken out in coming months.

In view of the above the broad range for Dow is between 17763---15175(it will change from time to time) and it is almost at midpoint now and there are critical points within the range, therefore going up it will get stiff resistance from those points at 16600 / 16740 / 16934 / 17270 similarly moving down it will find support at 15979.75 / 15855.12 / 15370 / 15340 break below 15340 can drag it down to much lower levels. In totality the bias is bearish and down move is expected in coming days. Therefore it would be better to avoid long call now but if initiated should be handled with extreme caution and care.

Remark:-The long term trend is still down. Therefore long call should be avoided.

Kindly note that make your cost your stop loss in favorable  trade and then trail it as the price move up/down to gain maximum profit and avoid losses. Use support and resistance levels as entry, exit, target and trailing stop loss points. DO NOT TRADE WITHOUT STOP LOSS.

Disclaimer:-The view expressed here are solely of the author and he is not at all responsible in any way for the outcome of the trade you enter based on the above view.

Note: Price stated here is of spot market.

Contact me for strategic guidance to enter and exit the trade.