Dow Jones – H4/D1
Our expectations – After the break-through of the horizontal resistance, the price returns to test the support area, as Price Action-a of the last minutes of the session on Monday clearly shows that the bulls prevail over the current levels. On a daily schedule, the price touches the support area formed by a previous peak, descending and ascending diagonal. Support for the level occurs and 23.6% Fibonacci correction of upward movement, as well as RSI 14, which remains over 50, pointing upwards. Unlike the vast majority of global indexes, US 50 and 200 SMA remained in bullish formation, despite the price correction.
Price Action – Here I will go down one timeframe, looking at H4. There is a bullish reversing bar that almost covers the previous one, and the new day starts with a gop up, which is not filled in the first minutes. On the contrary, the price goes upwards. The current formation shows the power of the bulls, despite the fundamental barriers created by the strong dollar and the tension between the US and China.
Alternative scenario: If the price returns below the support area, the positive scenario will be spoiled and more likely to see a fall in the index price.
Trader Petar Milanov