The Dow Jones is sitting at record highs and in the absence of bearish price action it has more room to go before running into a potential obstacle. A few hundred points ahead lies the top-side parallel of an upward sloping channel. There are three inflection points on both sides of the structure, making it a sound one.
The top of the channel won’t necessarily stop the market from continuing to rise, but is certainly a spot, if reached, to watch for bearish price action to develop. A strong reaction, for example a 1-2% down day, could set into motion a decline. A pullback from current levels will have the January 2018 trend-line in focus as support.
For now, it’s a tough spot to initiate fresh longs, and even tougher for shorts. For those running with longs from good prices, it may hold beneficial to hold tight until sellers show up.
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Dow Jones Daily Chart (support/resistance lines to watch, in between for now)
Dow Jones Chart by TradingView
Crude oil is a difficult handle, no question. It has held little directional flow and doesn’t seem like it is set to have any for the foreseeable future. Traders will likely be best served fading levels until conditions change. Right now, WTI is up against the top of a multi-week channel, which may mean another turn down is coming soon. If price can sneak out of the channel, then look for it to be a short run before trend-lines come into play as resistance. On the downside, keep the bottom of the channel in mind as support for potential longs.
Crude Oil Daily Chart (choppy inside channel)
Crude Oil Chart by TradingView
Gold is sitting on support around the 1450-line, and within the confines of a developing big-picture bull-flag the trend is down. Another shot lower appears to be in the cards soon. If so, watch how price action plays out at the lower end of the ongoing development of the bull-flag. Generally speaking, conviction and good risk/reward for either side of the tape is lacking. This could persist for a while longer.
Gold Daily Chart (weak within developing bull-flag)
For the full set of technical details and charts, check out the video above…
Resources for Index & Commodity Traders
Whether you are a new or an experienced trader, DailyFX has several resources available to help you; indicator for tracking trader sentiment, quarterly trading forecasts, analytical and educational webinars held daily, and trading guides to help you improve trading performance.
We also have a series of guides for those looking to trade specific markets, such as the S&P 500, Dow, DAX, gold, silver, crude oil, and copper.
---Written by Paul Robinson, Market Analyst
You can follow Paul on Twitter at @PaulRobinsonFX
