With the Dow Jones Index surging seven days in a row straight up, we’d be completely loopy to plan for a pullback as an alternative of shopping for, shopping for, shopping for a rally that’s by no means going to finish… proper?
Let’s at least PLAN for the potential (doubtless/inevitable?) pullback but to return in the Dow and it might begin at this time.
Here’s the Dow Jones Daily Chart breaking above 22,000 for the first time ever:
We have a “Perfect Pullback” in a rising market to the 20 day EMA (inexperienced) in late July.
From there, consumers surged the market greater day after day all the method to the present excessive.
Tuesday and Wednesday’s periods gave us doji reversal candles ABOVE the higher Bollinger Band which – in regular occasions – is a signal of warning.
Before we step inside the present worth motion, let’s take a look at February 2017.
We noticed a similar pullback to the rising 20 day EMA ignite a bullish hearth that despatched the Dow surging towards – then above – 21,000 in a roughly 14 day straight-up rally (we’re solely at seven now).
When all appeared bleak with comparable reversal candles into 21,000, we noticed a HUGE bullish gap-up into 21,200 earlier than worth spent the subsequent two full months pulling again in a retracement part.
Draw comparisons from this era to what we’re seeing now.
Let’s step INSIDE the worth motion to the 30-min intraday chart:
We see the end-of-July continuous bullishly gapping, secure rally from 21,500 to 22,000.
Momentum (and quantity) have been robust in the starting of the rally which confirmed the bullish worth motion, suggesting even larger costs possible but to return (they usually did).
As these new worth highs towards 22,000 developed, momentum started declining (diverging) on each Tuesday and Wednesday.
We’re seeing low/flat momentum readings proper now into the essential 22,000 pivot.
Simply said, you need to at least PLAN for a Pullback/Retracement and be able to take income or (aggressively) short-sell it to commerce a departure from 22,000.
If February is our information, then we might be in retailer for yet one more bullish burst ABOVE 22,000 earlier than the correct pullback happens.
Either means, prepare to regulate your positions and plan your subsequent transfer away from 22,000.
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Corey Rosenbloom, CMT
Follow Corey on Twitter: http://twitter.com/afraidtotrade
SOURCE: Afraid to Trade.com Blog – Read whole story here.