Dow Jones Industrial Average (DJIA) Technical Analysis 2011.09.23

New lows on DJIA...are we looking at a broader decline?

The futures market of Dow Jones Industrial Average made a new low yesterday (10,596) after it broke the support zone between 10,778 and 10,827 levels.

Today’s price action confirmed that the above mentioned zone is an important one because the pullback was stopped and reversed around this area. The main support is set at 10,600 level and an eventual rebound at these levels will provide a good premise for a few days of up reaction.

However, there is not enough data at this point that can signal a possible reverse. Therefore, we will monitor the 10,600 area and try to establish if it is going to be a reverse level.   

Crude Oil (WTI) Technical Analysis 2011.09.22

This is the move I have expecting!

This is the move I have been expecting on Crude Oil (WTI). There were plenty of signals along that anticipated a highly probable down move.

Both of yesterday’s targets ($85,08 and $83,50) were hit by now and furthermore, the bearish move is stronger than anticipated. The nearest support is set at $80,24 and this area could prove to be a temporary low as the sellers could choose to close their positions and the buyers could bet on a reaction. However we do not have yet enough evidence for estimating a low around the current levels ($80,00-$80,24). The main resistance is set around the $83,20-$83,57 area, where the previous lows are set.

On the larger timeframe (Daily) we can see the broader outlook of the price action of the previous ½ years. The $80,00 area seems a strong support in this chart too but if it is broken, we could expect further bearish move towards the $70,00 area. If this scenario will turn out to be right, the price development is going to take a while (few weeks).

However, this chart will be further analyzed on the 30min time frame in order to find closer support and resistance and to create price action scenario for a timespan of a few days.

    

Dow Jones Industrial Average (DJIA) Technical Analysis 2011.09.22

Bearish scenario confirmed!

The expected move in Dow Jones Industrial Average finally happened after a period of rising prices that concluded wave c of wave ii.

The FED conclusion of the two day meeting triggered the sell-off and in a matter of hours the index came down to the main support area of $10,775. The intermediate supports at were of little importance in such a devastating price action that reached the previous lows area. However, the first pullback occurred at the $11,267 area (our first support of yesterday).

There are not many things to say now besides that the current area is tempting for closing short positions (or at least to reduce) and we could probably see a reaction.

The 4 hour chart reveals the bigger picture and provides the same bearish outlook. The main target is set around the previous lows (9^th of august – $10,500 area). Although the market has a clear down trend we should be prepared to witness rallies of a couple of hundred points.

As we don’t have a bottom yet formed we cannot establish retracement levels.     

Dow Jones Industrial Average (DJIA) Technical Analysis 2011.09.21

How is the market going to react AFTER the FED decision?

Wave ii of the down impulse move of wave (v) completed yesterday, as it created a higher high in at the $11,550 level.

Unlike last week, the low optimism of investors in reflected in the market through the sharp declines towards the end of the sessions. Technically speaking, we are focused on the $11,480-$11,550 resistance area that can establish a strong border between the uptrend or the downtrend that is due to come. The first strong support is set at $11,270 level (wave 4 through) and it is shortly followed by the $11,140 area.

VERY IMPORTANT: today at 14:15 ET the FED will announce their decisions regarding a future “rescue” plan. This will provide high volatility in the markets and could breach the above mentioned resistance. However, the market direction after the news will have the most important “word” to say.

Crude Oil (WTI) Technical Analysis 2011.09.21

Crude Oil is confirming the bearish move

The brake of the T1 trend line is a strong signal of a further down move and, many times, the price retests the trend line before resuming the main trend.

The rally in yesterday’s session breached the T1 resistance line but the sellers acted quickly by re-establishing the prices below the T1 line. This move proved that the bears are stronger and there is a high probability of seeing lower lows in the next days.

The main down target remains set in the $83.57 area but this should be re-valued on further decline conditions. However, the previous lows from the $85.00 area are creating a strong support that could lead to a temporary reversal.

The Elliiott Wave count for the current decline shows the developing of the fifth wave that should have five sub-waves. Wave (iv) retraced 50% of wave (iii) and created a flag pattern that contained a false break up. 

The first target for wave (v) is set at the $85.00 area but in the same time we should be able too see the 5 wave internal structure in order to define a closer end-zone for this down move. 

Crude Oil (WTI) Technical Analysis 2011.09.20

Crude Oil broke a trend line!

We are in a clear down trend on Crude Oil since September 13 and yesterday’s price evolution confirmed it by the break below T1 trend line.

The fail to retest the $88,00 resistance yesterday eventually proved the bears’ strength and provided further decline outlook for this week. The consolidation below the T1 trend line is typical for a trend continuation and we are looking for a flag or a pennant  pattern that could test the $86,50 – $87,00 resistance area. Basically, we expect bear intervention around the resistance levels.

An eventual trend reversal in the above mentioned area will set the down target to the $83,60 area (this target being mentioned in the previous analysis).     

On the 15 minute chart (attached below) we can take a closer look to the current price action. The correction pattern is a flag that has its upper border in the $86,90 area. There is a strong resistance in the $86,50 - $87,00 area, given by yesterday's temporary lows ($86,55) and the T1 trend line.

An eventual reversal in this area will provide further bearish outlook. The classical selling signal of the flag pattern is the braking of its lower border but the above mentioned scenario (failure at resistance zone) will give the first trend resuming signal.

Exhaustion signs for DJIA

The Dow Jones Industrial Average Index gapped down this morning, after creating a new high on Friday (~10,523) in what seems to have been an exhaustion move.

The rising wedge (12 sept. – 16 sept.) signals a high probability of a down move that is usually quick and long in price. Today’s first support is set at $11,326 (morning low) and an eventual break of it will activate the older support from 11,140 area.

If the buyers will try to reach for the $11,463 area, the sellers will try to stop them in the 11,463-11,523 resistance zone. In this case, the down move will be re-confirmed, targeting $11,140 and even $10,775 in a few days.    

The 4 hour chart below shows a broader picture of DJIA price evolution. We are clearly in a down trend (with lower highs and lows) and the failure to reach the previous low, on the 1st of September, indicated the first sign of bearish continuation. Each delineation in the chart below represents one week.

Further more, the 50% retracement is vital for determining the demand /offer balance. The two highs after the 1st of September that did not reach the previous high (01 sept, 11,710) are confirming the bearish outlook for the upcoming days (even weeks). 

Crude Oil (WTI) Technical Analysis

Are the sellers in control already?

Crude Oil dropped on Friday after sellers kept their offer higher than the demand below the $90.23 main resistance.

Our first target on the short side was hit this morning as the price tested the lower border of the wedge (T1 line). Next, on the short term, we expect further decline as soon as the T1 trend line will break. The $86.50 area is clearly a key zone for the future price as it could hold as a support and, after the break of it, will stand as the main resistance.

There are two scenarios presented in the chart below (30 min. timeframe) that can fit the future market conditions. The $88.00 area is today’s resistance and a failure of breaking those levels will confirm the sellers’ strength. The main target in case of a down-break is set at $83.60 area.