Technical Analysis DJI : 2019-08-30

[IFC Markets]

Positive data bullish for DJI

Durable goods orders in US rose more than expected as private sector continues expanding. Will the DJI stock index continue advancing?

US data lately were positive on balance: durable goods orders rose in July, and expansion in services sector continued (albeit at slower than forecast pace) in August while manufacturing sector contracted, according to Markit PMIs. And Markit’s composite PMI indicates that private sector activity expansion continued in August though at slower pace. Continuing economic growth is bullish for US equities market.

On the daily timeframe DJI: D1 is rising after breaching above the resistance line. It has returned above 200-day moving average MA(200). These are bullish developments.

• The Donchian channel indicates uptrend: it is tilted up.
• The Parabolic indicator has formed a buy signal.
• The MACD indicator is below the signal line and the gap is narrowing, which is a bullish signal.
• The RSI oscillator is rising but has not reached the overbought zone.

We believe the bullish momentum will continue as the price breaches above the upper boundary of Donchian channel at 26452.7. This level can be used as an entry point for placing a pending order to buy. The stop loss can be placed below the fractal low at 25384.1. After placing the order, the stop loss is to be moved every day to the next fractal low, following Parabolic signals. Thus, we are changing the expected profit/loss ratio to the breakeven point. If the price meets the stop loss level (25384.1) without reaching the order (26452.7), we recommend cancelling the order: the market has undergone internal changes which were not taken into account.

Technical Analysis Summary


Order

Buy

Buy stop

Above 26452.7

Stop loss

Below 25384.1