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Dow Jones May See Some Profit Taking Ahead of US Jobs Report

Dow Jones May See Some Profit Taking Ahead of US Jobs Report

Jeremy Wagner, CEWA-M, Head of Education


Talking Points

-Dow Jones hit the target low of 16,780 yesterday

-The subsequent bounce higher appears corrective, look for another dip to 16,780 or lower

-Event risk on Friday morning via the US Non-Farm Payrolls report likely creates volatility tomorrow

Dow Jones Industrial Average hit a low yesterday of 16,763. We highlighted yesterday that the price behavior around 16,780 would help provide clarity to the maturity of the uptrend. Prices subsequently bounced hard higher which leaves the door open for even higher prices down the road.

However, shorter term the US30, a CFD which tracks the Dow Jones Industrial Average, sits on an inflection point to where the higher probability move is back towards 16,780. Therefore, an intraday trader could consider shorting using the overnight highs as risk.

Dow Jones (ticker: US30) Prices May Push Back towards 16,780

We’ve studied the behavior of traders and found this one little tweak on risk to reward ratios increased the pool of traders who were profitable from 17% to 53%. Learn more about that tweak in pages 7-9 of the Traits of Successful Traders Guide. Keep that tweak in mind as you assess the US30 (residents outside of the United States can trade this CFD through FXCM.)

Tomorrow morning, the US non-farm payroll report will be released so anticipate some volatility in the morning. As a result, if we are fortunate enough to take profits at 16,780, then we’ll call it a day. Otherwise, I do want to be flat at the end of today regardless of the trade’s P/L. The risk to reward isn't there to withstand the whipsaws of the NFP release tomorrow.

Related Reading:

US Indices: S&P500 and Dow Reaching Topside Objectives

Dow Jones Under Pressure After Surging (Yesterday’s Report)

Gold Prices Capture Largest Monthly Gain in 4 Years

---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.