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Dow Jones Talking Points:

- The Dow has continued its topside advance by gapping-up to another fresh high this morning. This keeps the door open for bullish continuation strategies, but traders may want to first let that gap fill-in before looking to implement bullish near-term themes on the index.

- As we move towards the end of what’s become a very strong Q3, the big question is whether we see profit-taking ahead of the period’s end, as we move towards the Q4 open in a couple of weeks.

- 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 Jones Gaps Up to Fresh Highs

The risk-on rally in US Equities continues, as both the Dow Jones Industrial Average and the S&P 500 are trading at fresh highs. We looked into this ahead of this month’s open, and we took a closer look at the deeper development of this theme ahead of the start of this week. The support zone we were following for the S&P soon came into play after the weekly open, and the Dow Jones Industrial Average has just gapped-up this morning to extend the topside move. Below, we’re looking at the ‘DIA’ ETF as a representation of the Dow, helping to illustrate this unfilled gap.

Dow Jones via ‘DIA’ ETF: Gap-Up to Fresh High, Unfilled Gap Remains

Dow Jones via 'DIA' ETF Daily Price Chart

Chart prepared by James Stanley

For traders looking at near-term continuation theories around the Dow, waiting for that gap to first fill-in could make the prospect of bullish continuation more attractive. The fear at this point would be chasing a surging market whilst at new highs, whereas awaiting a pullback can, at the very least, afford for more adequate risk management mechanisms.

Looking at the index itself, we can find yesterday’s swing-high as a potential point of near-term support. This opens a zone of higher-low support potential around that gap that runs from yesterday’s high around 26,446 up to this morning’s open of 26,519. If this gap does fill-in, prices may temporarily test below this zone, which would not necessarily obviate the bullish theme in the index.

Dow Jones Industrial Average (Index, Delayed): Illustration of Morning Gap, Potential Support Zone

Dow Jones Index Hourly Price Chart (Delayed)

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