Dow Update July 2015 (D)
Created on Wednesday, 01 July 2015 03:49
Written by Austin Galt
Since the last report a couple of days ago, the Dow got smashed in reaction to the Greeks announcing a referendum on the terms of their Euro debt. That is set to take place this Sunday and with people unable to get much of their cash from the banks they are effectively being held to ransom. Also, the Greek government now looks set to compromise somewhat which has led to price heading back up today.
So, let’s quickly update the picture using the daily chart.
DOW DAILY CHART
We can see the news of the pending default sent price down to support from the lower Bollinger Band. I still expect a rally into final secondary high and if that happens quickly then I am looking for price to top out back up at the upper band.
While we had a 7 point broadening top bring in the all time high, it looks like we may well have a 5 point broadening top to bring in the secondary high. We can see this formation, denoted by the numbers 1 to 5, is still playing out with the recent low the point 4 low. Price may be headed now to put in the final point 5 high.
The recent point 4 low set up bullish divergences on the RSI and Stochastic indicator and perhaps the point 5 high will set up bearish divergences. Let’s see.
I have added Fibonacci retracement levels of the move down from all time high to point 4 low and I am targeting the point 5 high to be near the 88.6% level which stands at 18263.
Also, I have drawn a Fibonacci Fan and I am looking for price to find resistance around the 88.6% angle.
A move below the point 4 low now without putting in a secondary high will likely mean price is taking a different route requiring more time.
While we nailed down the all time high, we now just need to nail down the secondary high and once confirmed will be time for the bears to picnic.