News & Analysis at your fingertips.

We use a range of cookies to give you the best possible browsing experience. By continuing to use this website, you agree to our use of cookies.
You can learn more about our cookie policy here, or by following the link at the bottom of any page on our site.

0

Notifications

Notifications below are based on filters which can be adjusted via Economic and Webinar Calendar pages.

Live Webinar

Live Webinar Events

0

Economic Calendar

Economic Calendar Events

0
Free Trading Guides
Subscribe
Please try again
EUR/USD
Mixed
Oil - US Crude
Bearish
Wall Street
Mixed
Gold
Bullish
GBP/USD
Mixed
USD/JPY
Bullish
More View more
Real Time News
  • Indices Update: As of 14:00, these are your best and worst performers based on the London trading schedule: US 500: 0.21% Wall Street: -0.35% FTSE 100: -0.94% France 40: -1.21% Germany 30: -1.23% View the performance of all markets via https://www.dailyfx.com/forex-rates#indices https://t.co/Doo7fWrpDf
  • Markets have digested the realization that the rollout of the vaccine campaign does mean an immediate solution to the current economic and social problems. Get your market update from @HathornSabin here:https://t.co/6L1lXf8W82 https://t.co/29E7PkyyaV
  • The $DXY continues to hold above the psychological level of 90 and is testing around 90.30 this morning. $USD https://t.co/ZoLnf9pCDE
  • Germany 30 IG Client Sentiment: Our data shows traders are now net-long Germany 30 for the first time since Dec 11, 2020 when Germany 30 traded near 13,135.60. A contrarian view of crowd sentiment points to Germany 30 weakness. https://www.dailyfx.com/sentiment https://t.co/uMIVmW3vUW
  • ECB's Lane: - If favorable financing conditions can be maintained, maximum amount of asset purchases may not be necessary - Recent intensification of pandemic represents a significant downside risk, requires continuation of various fiscal support measures #ECB $EUR
  • ECB's Elderson: - Impact of the crisis on the European banking sector has yet to be fully revealed - Consequences of Brexit still need to be dealt with - It is "high time" to complete the EU banking union through institutional/regulatory architecture, deposit insurance #ECB $EUR
  • Italy's coalition Democratic Party (PD) wants Conte to resign and guarantees support for him as head of new government - PD Lawmakers $EUR
  • $NZDUSD is back above 0.7200 this morning, trading near one of January's key levels for the pair. $NZD $USD https://t.co/WIsB7K8Zus
  • UK PM Johnson to visit Scotland to make impassioned plea for Scotland to reject narrow separatism - The Sun $GBP
  • 🇺🇸 Chicago Fed National Activity Index (DEC) Actual: 0.52 Previous: 0.27 https://www.dailyfx.com/economic-calendar#2021-01-25
Dow Futures Down as DJIA Selloff Has More Room to Run

Dow Futures Down as DJIA Selloff Has More Room to Run

Jeremy Wagner, CEWA-M, Head of Education

Talking Points

-Dow Futures down 0.6% after 2 days in a row of losses for DJIA

-Triangle pattern is our analog for price suggesting another 5-7% selloff

-DJIA support near 16,500 and possibly 15,750

Dow futures are down about 0.6% this morning after 2 days in a row of losses for DJIA. The anticipated reversal for Dow Jones appears technical in nature such that a host of resistance was seen as profit taking opportunity on the 14% run higher since February 11.

The pattern we are using as an analog is a triangle pattern (see idealized pattern below). This would suggest Dow Jones gives back about 5-7% of the gains which may open the door for another bullish run in the coming weeks.

Dow Futures Down as DJIA Selloff Has More Room to Run

On Tuesday, we identified target levels 16,500 and 15,750 for a selloff on the US30, a CFD which tracks the DJIA. 16,500 is near where the 200 day simple moving average resides. A more aggressive lower level of 15,750 is watched if the February 11 low were tested.

The sentiment of traders in the US30 show bulls are rushing in while bears head for the exits. Long positions are 41.5% higher than yesterday while short positions are 16.7% lower during the same stretch. This provides another clue that the selloff may have some legs as traders typically position on the wrong side of the trade. (For more on trading with sentiment, watch this 5 minute video.)

Dow Jones (ticker: US30) Selloff Has Room to Run

Dow Futures Down as DJIA Selloff Has More Room to Run

Created using FXCM’s Marketscope charts

We never know for sure if the anticipated move will work in our favor. For the time being, risk levels can be set at 18,000 and we’ll look to lower the risk to better than break even if the DJIA continues to fall.

If we are completely wrong and prices were to accelerate above 18,000, then we might consider a stop and reverse to position to the long side. If we move closer to 18,000, we’ll share the alternative pattern as the triangle would be invalidated.

Lastly, be mindful that trading on NYSE will be closed on Good Friday, March 25.

Suggested Reading/Viewing:

Dow Jones Industrial Average 7 Day Win Streak at Risk

Introduction to Sentiment Trading [5 minute video]

Gold Prices Press 4 Week Lows

---Written by Jeremy Wagner, Head Trading Instructor, DailyFX EDU

Follow me on Twitter at @JWagnerFXTrader .

See Jeremy’s recent articles at his Bio Page.

DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.

DISCLOSURES