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Dow Jones Talking Points:

- The 2019 recovery rally continues, helping to further eradicate prior December losses. Prices in the Dow are now approaching the 88.6% retracement of that December bearish move.

- The consistency of the current rally has been fairly strong, as the Dow is currently working on its seventh consecutive week of gains. But, that 88.6% retracement mentioned above is very nearby another potential resistance level of interest, begging the question of how long and for how far might bulls be able to push without some element of pullback.

- 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 Bulls Continue to Push

The first quarter of 2019 has been a stark change-of-pace from the bearish price action that had developed in US stocks during Q4. But as the door has opened in the New Year, a bit of calm has taken-hold and equity bulls have gone right back to work. In the Dow, prices are currently working on their seventh consecutive week of gains after setting a fresh 15-month low on the day after Christmas. Prices have posed a strong recovery from that December sell-off as bulls are pushing prices up towards the 88.6% Fibonacci retracement of last month’s bearish move.

DJIA Four-Hour Price Chart

djia dow jones four hour price chart

Chart prepared by James Stanley

Around that 88.6% retracement is another item of interest, as that level is confluent with the 14.4% retracement of the post-election run in the index. This creates a 23-point zone of interest that runs from 25,572 (14.4% of the post-Election move) up to 25,595 (88.6% of the December sell-off); and while that resistance potential may not yet be attractive enough to begin plotting for reversal themes, given the consistency of recent bullish momentum, it could be looked to as a point-of-pause for this current topside run.

Dow Jones Weekly Price Chart

djia dow jones weekly price chart

Chart prepared by James Stanley

Near-Term Strategy

On a shorter-term basis, for traders looking at the long side of US stocks, there may soon be a workable backdrop in the Dow. The 25k psychological level provided a bit of resistance-turned-support last week, and this comes-in around the 76.4% retracement of the December sell-off. As buyers were helping to cauterize support around this level at the end of last week and the beginning of this week, a series of higher-lows developed ahead of that push to fresh two-month-highs. A pullback towards this area, with respect of prior support at this week’s swing-low, can re-open the door for bullish short-term strategies in the index.

Dow Jones Two-Hour Price Chart

DJIA: Dow Rally Extends to Fresh Two-Month-Highs

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 for Q4 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