DJIA: fixing of profit leads to a decrease in the indices _29/07/2016

Trading recommendations

Buy Stop 18545. Stop-Loss 18360. Take-Profit 18600, 18700

Sell ​​Stop 18360. Stop-Loss 18480. Take-Profit 18170, 17920


Technical analysis

US stock indices halted their record growth observed since the beginning of the month. DJIA index after reached new record highs near the mark of 18620 is reduced and is close yesterday and month lows near the mark 18370. Through this mark also passes the lower line of the rising channel on 4-hour chart.

OsMA and Stochastic indicators on the monthly and weekly charts are on the buyers side, but on the daily and 4-hour chart unfolded on short positions.

In the case of the breakdown level of 18370 reduction may continue to support level 18170 (EMA200 on 4-hour chart). A deeper correction in the technical analysis of the level of support allowed 17920 (Fibonacci correction level of 23.6% to the growth in the wave with a level of 15660 after the recovery in February this year to the slump in the markets since the beginning of the year).

Also, while the price of the DJIA index is above 17600 (EMA200 and the lower line of the rising channel on the daily chart), 17490 (Fibonacci level of 38.2%), talking about the turn of the upward trend is premature.

More likely it looks short-term correction to levels of 18170 and 17920, which may take time before the Fed meeting in September (20-21 September).

It is also necessary to monitor the readings of indicators OsMA and Stochastic on the 4-hour and daily charts. In the case of "discharge" and go to the side of the customer is necessary to revisit long positions.

Rising positive dynamics yet persisted despite the overdue correction.

Much will depend not only on the recovery in investor risk appetite, but also from the Fed position in the US monetary policy issue. If the soft rhetoric by the Fed regarding interest rates in the US, as well as the receipt of positive macro data from the US continues, the US indices, including the index Dow Jones Industrial Average, continue to rise.

The reverse scenario is breakdown of support levels 17600, 17490 and broken uptrend.

Support levels: 18370, 18170, 17920, 17600, 17490

Resistance levels: 18450, 18500, 18620


Overview and Dynamics

Following the auction on Thursday, DJIA decreased by 0.1% to 18457.00 points, S & P500 rose 0.2% and the Nasdaq Composite added 0.3%. DJIA index is falling for the fifth consecutive session.

However, the decline in the index is far corrective in nature after the recent rapid growth in July. The decline may also be due to profit-taking on long positions at the end of the trading month (today is the last trading day of the month).

Positive macroeconomic data coming recently from the United States, as well as the Fed's restrained position with regard to interest rates in the US contributed to the rise in US indices in recent years.

Low interest rates and investors' confidence that the US economy has maintained a strong position in an uncertain world continue to hold stocks at high levels, respective new record highs in recent years.