Monday, July 23, 2018

INDU Dow Jones Industrials Daily Chart; Sideways Symmetrical Triangle

The Dow displays a textbook sideways symmetrical triangle pattern. The triangle forms an apex out to the September-October time frame so a major market direction decision is on the come over the next couple-three months. Typically, price will poke out of the triangle about one-half to two-thirds of the way through which turns out to be the fake-out move with price returning inside the triangle and then exiting the opposite side. This chart, however, show price honoring the sideways triangle from January to present without any exit on either side as yet.

There is going to be a big winner and a big loser as the weeks play out. The bulls and bears are battling. The vertical side of the triangle is a huge 2800 points. If the bulls win and breakout from 24.8K to 25.2K, the upside target is 27.6K to 28.0K. If the bears win and price collapses out the bottom of the triangle at 24.5K to 24.9K, the downside target is 21.7K to 22.1K.

If the bulls break out higher, a breach of 26.5K will point to euphoric upside ahead for stocks going forward and a 28K target. If the bears break down lower, a breach of 23.3K will point to a collapse in price and perhaps the end of the long bull rally since March 2009.

Note the moving average ribbon with price above the 20 above the 50 above the 100 above the 150 above the 200 in late January. You knew a mean reversion was required and it occurs. Price collapses in February to test the 150-day MA and bounce (blue circle). Technicals matter. The moving average ribbon rolls over and look at the tight consolidation of all the MA's between 24505 and 24827. The bulls have the upper hand since price is above the upper limit of the moving average band at 24827.

Something epic is about to happen in the stock market in the weeks ahead. Watch for the break out, or break down. When price exits the triangle, either side, it will likely come back to back kiss the triangle trend line. At that time, keep in mind, as mentioned above, that it may be a fake-out move so the reaction from the back kiss will tell the tale. This information is for educational and entertainment purposes only. Do not invest based on anything you read or view here. Consult your financial advisor before making any investment decision.

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