Indices Market Analysis – Dow Jones

*Live market analysis of Dow Jones Industrial Average Index!*

In this blog post I will talk you through my technical analysis of the Dow Jones index, explain my thoughts on what I think price might do over the next few days and weeks and show my current open trade positions.

As always, I use the TradingView platform for all my charting and technical analysis. You can get to their website by clicking on the link below.

Let’s get right in to it and look at the daily and weekly timeframe charts.

Dow Jones weekly timeframe chart
Dow Jones daily timeframe chart

Both of these higher timeframe charts tell a similar story. Price is on a clear bull run breaking previous weekly highs and making new all time highs every week for the past 9 weeks. This is good to see but it has caused many to be skeptical. Personally, I am of the opinion that I want to be riding the momentum until it reverses. Therefore I am buying the dips and support zone bounces on these timeframes to take advantage of the large scale buying on US stocks.

US dollar is predicted to continue its weakness through Q1 of 2020 and a weak dollar means strong stock prices. Much like a weak Pound usually drives the price of the FTSE 100 index up.

US Stocks actually dropped late last week on the announcement that trump had ordered a drone strike on Iran and killed their military leader however, the age old saying goes “buy the cannons, sell the trumpets”. And that is what I did. This quote refers to the fact that war encourages increased production and manufacturing which in turn will increase the value of stocks in the Dow Jones Industrial Average. Hence, buying stocks at the sound of the cannons (beginning of the war) and selling stocks on the sound of the trumpets (at the end of the war).

Unfortunately, it is not quite that simple anymore because manufacturing is declining in almost every country except china and India and a lot of the goods the US uses is actually imported so the effect of a war on US stocks has decreased. The US has a trade deficit, much like the united kingdom where we import more goods than we export.

Let’s look at the 1hr timeframe chart and I will show you my current long positions on the Dow.

You can track my trades on the US indices live on the TradingView platform by clicking on the link below.

Dow Jones 1 hour timeframe chart

When I entered this trade on Friday, price was approaching the 28,500 level and I was keen to buy in to the clear bullish trend that was forming. Price had continued to make higher highs and higher lows, and that level looked good for a new higher low to form.

Initially price bounced hard through Friday afternoon with heavy buying in to the weekend but a gap down on Sunday evening (GMT) has meant price has become a little more complex.

However… price did not make lower lows and the support at 28,400 held and buyers are coming back in to the market this week. I am keen to hold this position on the bet that USD continues to weaken and US stocks continue to make new higher highs this week.

Retail trading data DJIA index

It is also very apparent that the majority of the retail trading market is trying to sell the US stock indices. The Wall Street (Dow Jones) index on the IG broker platform is showing 76% of positions are net short which is pretty huge. This gives me confidence that a lot of these are short term bets and are ready to be short squeezed out of the markets.

Dow Jones 1 hour timeframe chart
(price predictions)

Useful Links:

All my technical analysis is done using the TradingView platform. You can get access via the link below.

My preferred broker of choice is IC Markets. Low spreads and trading costs really help long term profitability. A link to their site is below.

Thanks for reading and please don’t forget to LIKE, SHARE and FOLLOW my blog to stay up to date with the latest market analysis and trading education posts.

DISCLAIMER: None of the information posted on this site is to be considered investment/financial advice. Trading is high risk and you should only trade with money you can afford to lose.

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