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Dow Jones Holds Near Seven-Month Highs: Levels to Know

Dow Jones Holds Near Seven-Month Highs: Levels to Know

2018-09-18 14:41:00
James Stanley, Strategist
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Talking Points:

- US equities continue to hold on to recent gains, and the Dow Jones Industrial Average is holding near seven-month highs. The index has made little ground so far in September, and RSI has begun to show divergence – indicating that a deeper pullback may be nearing.

- Stocks have held up quite well through a variety of negative headlines and potential factors of pressure, highlighting just how strong that push has been on the bid. As global equities have put in a fairly strong showing so far this week, with both the DAX and FTSE recovering while the Nikkei has embarked on a vivid topside breakout – the potential for further gains remains in the Dow.

- 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.

Do you want to see how retail traders are currently trading the US Dollar? Check out our IG Client Sentiment Indicator.

Dow Holds Near Seven-Month Highs

US stocks are holding on to recent gains despite increased tensions on the tariff front. As we looked at last week, that persistent bullish backdrop that’s held in US equities over the past two-and-a-half months remains as price action holds near highs. The growing concern at this point is one of longer-term context, as we’ve seen minimal movement in the month of September after bullish breakouts drove prices-higher in both July and August. RSI on the Daily Chart has begun to show divergence after last week saw the Dow squeak up to a fresh seven-month high.

Dow Jones Daily Price Chart: RSI at Lower-High After Last Week’s Seven-Month High in the Dow

Dow Jones Daily Price Chart

Chart prepared by James Stanley

As we’ve been following, the trend in US equities and the Dow Jones Industrial Average remains strong to the upside, so traders would likely want to continue to move-forward with a bullish bias. The challenge at this point is the fact that we haven’t really seen much for pullbacks so far in September as prices have spent much of the period oscillating back-and-forth. So, for longer-term perspectives, traders would likely want to take a back seat until either a) a deeper retracement shows to bring prices to a more attractive support level or b) prices continue up to fresh higher-highs, opening the door for bullish continuation strategies with higher-low support at prior resistance.

Two of the below support levels will look familiar, as both 25,759 and 25,500 were looked at last week. What has changed, however, is the nearby zone that runs from 26,000 down to the 78.6% retracement of the Q1 pullback in the index, and this can be approached as an aggressive level to look to for higher-low support.

Dow Jones Four-Hour Price Chart

Dow Jones Four Hour Price Chart

Chart prepared by James Stanley

You may also be interested in:

The Dow Spends a Week at Support: Will Bulls Follow-Through?

Equity Forecast for Dow, S&P 500, DAX, FTSE and Nikkei

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 for Q3 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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