Yesterday, the Dow Jones Industrial Average fell to the low of August 5 around the EMA of 200. We highlighted such a scenario in our previous analysis when we wrote our sell signal at 35,404. You can review this forecast and get some tips for your strategy.
The Dow Jones has reached the important support around the EMA of 200 located at 34,830. This level could give it a good technical bounce and rise towards the area of the SMA of 21, located at 35,269.
Since the Dow Jones broke its uptrend channel, it formed an inverted pennant pattern. Now, it has completed its decline and could enter a period of consolidation.
On the contrary, if the downward pressure prevails, the Dow Jones should break the 5/8 Murray line and consolidate below the 200 EMA, around 34,800. Below this level, the decline could accelerate to support of 4/8 of Murray located at 34,375.
Several factors are added to the fall of the Dow Jones, such as the decline in retail sales for the month of July in the US, as well as the bad figures that it has been dragging for days such as the Consumer Confidence data and also the events in Afghanistan that are pushing down all stock markets in the world.
The key point to watch is the area of the 200 EMA. Above this level, there is an opportunity to buy. The Dow Jones could change the trend and fall to the low of 34.375. The eagle indicator is showing an oversold signal.
The FOMC released the minutes of its last meeting. The document showed that some participants suggested that it would be prudent for the committee to prepare to start reducing its pace of asset purchases relatively soon.
It is probable that in the medium term the Dow Jones will continue its fall to levels of 34,000 and 33,000 due to the data published by the FOMC.
Support and Resistance Levels for August 19 - 20, 2021
Resistance (3) 34,149
Resistance (2) 35,045
Resistance (1) 34,956
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Support (1) 34,685
Support (2) 34,478
Support (3) 34,167
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Trading tip for Dow Jones #INDU for August 19 - 20, 2021
Buy if rebound EMA 200 at 34,830, with take profit at 35,269 (SMA 21), stop loss below 34,780.
Sell below 34,800 (5/8), with take profit at 34,375 (4/8), stop loss above 34,850.