DJIA meeting 5 independent support levels
Friday the market took it on the chin, with the DJIA slashing away 200 points. I was stopped out of all my DJIA long positions at break-even. The RumWave chart was at a very specific resistance point mid week and indeed bounced to the downside.
Now the DJIA is meeting a cluster of 5 independent support levels: (1) the 50 day simple moving average (SMA) (2) a historical level of resistance / support at 13,300 dating back to May of this year (3) a potential completion of an A-B-C Elliot Wave pattern in the vicinity of 13,250 (4) a 23.6% Fib retracement at approximately 13,260, and (5) a specific support level on the RumWave chart.
I'd venture to guess that most chart readers subscribe to at least one of the above reasons as a possible level of support for the market to bounce off of. If you combine all of the people who believe in any one of the methods then multiply that by the 5 methods you have some significant market moving power, my friend.
Pictures for your viewing pleasure:
The scores above took a breather, but the overall score total is still pretty low.
The yellow line shows the level of support / resistance in the vicinity of 13,300.
Above is a closer look at that level of resistance, along with a dashed yellow line showing the 50 day SMA. the last red candle is hovering on top of both of these support levels.
THE BOTTOM LINE: I would not be surprised at continued selling Monday to finish out the Slow Stochastics and CCI indicators. I think this downside impulse will end in the vicinity of 13,250 (a bold statement, I don't usually do this). If I see signs of a change in trend at that point, I'll look to get back into long positions.
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