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Dow Jones Price Outlook: Fresh DJIA Highs Follow Support Bounce

Dow Jones Price Outlook: Fresh DJIA Highs Follow Support Bounce

James Stanley, Senior Strategist

Dow Jones Talking Points:

- The Dow Jones Industrial Average has continued a topside break from a bull pennant formation, continuing-higher after last week’s pullback to a key area of chart support. Prices in the Dow are now at fresh six-month-highs and are getting very close to the all-time-high that was set in the opening days of Q4, 2018.

- The focus is now on earnings around US stocks with both Bank of America and Blackrock reporting before this morning’s bell, and tomorrow brings Morgan Stanley to give another angle on bank performance in Q1.

- DailyFX Forecasts on a variety of currencies such as the US Dollar or the Euro are available from the DailyFX Trading Guides page. If you’re looking to improve your trading approach, check out Traits of Successful Traders. And if you’re looking for an introductory primer to the Forex market, check out our New to FX Guide.

Dow Jones Rallies to Fresh Six-Month-Highs

It had been a rather sideways start to Q2 for the Dow Jones Industrial Average. Setbacks at Boeing have continued to constrain the blue-chip index, and while the S&P 500 continued to rally through the Q2 open, prices in the Dow snapped back last week to re-test a key zone of support. That support grind in the Dow lasted for three days last week, until a Friday breakout pushed prices back up towards prior highs, aided in part by a recovery in Boeing, which is the Dow’s largest component at more than 10% of the index. That enthusiasm has lasted through this week’s open, and at this point, the Dow Jones Industrial Average is trading at fresh six-month-highs.

Dow Jones Four-Hour Price Chart

DJIA Dow Jones Four Hour Price Chart

Chart prepared by James Stanley

As mentioned above, key for this bullish move has been a similar scenario in Boeing (BA). Boeing is a key aspect of the Dow Jones Industrial Average, and when the company was surrounded by tragedy in early-March, Boeing stock took a large dive down to a key area of confluent support. This runs from 364.85-369.24; and this area has held support in the stock after multiple attempts from bears to break-lower. Most recently, this zone came back into play last week, going along with the Dow’s visit to key support; and buyers have so far responded to push prices-higher.

But – be careful of chasing this move; in either Boeing or the Dow, as a portion of unfilled-gap remains in the BA chart that could be closed by yet another visit to this key zone of support.

Boeing Four-Hour Price Chart: Key Support Zone Holds the Lows

BA Boeing Four Hour Price Chart

Chart prepared by James Stanley

Dow Jones Near-Term Strategy

At this point, the primary complication with sizing up exposure in the Dow is one of chart position. Prices have moved far away from that prior zone of support; and lurking just above is the all-time-high on the index, and this could be a difficult area to plot profit targets beyond. This produces the net scenario of a rough risk-reward ratio and, at least at this point, buyers may want to stand back for a clearer backdrop.

For traders that would like to look for a pullback in order to re-open the door for bullish trend strategies, an area of potential support exists from 26,302 up to 26,351, with the latter of those prices functioning as the 88.6% Fibonacci retracement of the Q4 bearish move.

Dow Jones Four-Hour Price Chart

DJIA Dow Jones Four hour price chart

Chart prepared by James Stanley

You may also be interested in:

Day Trading the Dow Jones: Strategies, Tips & Trading Signals

To read more:

Are you looking for longer-term analysis on the U.S. Dollar? Our DailyFX Forecasts have a section for each major currency, and we also offer a plethora of resources on USD-pairs such as EUR/USD, GBP/USD, USD/JPY, AUD/USD. Traders can also stay up with near-term positioning via our IG Client Sentiment Indicator.

Forex Trading Resources

DailyFX offers a plethora of tools, indicators and resources to help traders. For those looking for trading ideas, our IG Client Sentiment shows the positioning of retail traders with actual live trades and positions. Our trading guides bring our DailyFX Quarterly Forecasts and our Top Trading Opportunities; and our real-time news feed has intra-day interactions from the DailyFX team. And if you’re looking for real-time analysis, our DailyFX Webinars offer numerous sessions each week in which you can see how and why we’re looking at what we’re looking at.

If you’re looking for educational information, our New to FX guide is there to help new(er) traders while our Traits of Successful Traders research is built to help sharpen the skill set by focusing on risk and trade management.

--- Written by James Stanley, Strategist for DailyFX.com

Contact and follow James on Twitter: @JStanleyFX

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

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