Sunday, September 14, 2008

$INDU Update for 09.14.2008


Monthly chart shows overlapping candles with topping tails. Bulls just can't seem to take it over the key LIS of 11,750.28, which happens to be the low of January 2000. Index remains below the 8ema, 34ema, and also below the up trendline in place. No buy signal/pattern evident on this timeframe.

Weekly chart shows index remains below the key LIS (old support becomes new resistance) of 11,635 area. There is a weak short term buy signal in place on this timeframe (higher low) in place. IF this buy signal plays out, THEN look for initial target to be the resistance at 11,867 (high for August 2008 ). This continues to look like consolidation/trading range.

Daily chart shows that the bullish gartley butterfly did in fact play out, and that the .618 fib target did indeed get hit. Sellers showed up once the .618 fib target was hit, taking it down to .886 fib support, where the bulls once again stepped back in, and took the index back up once more. The pattern that is being created from the July 2008 low looks to be a series of overlapping three waves. The bulls just can't seem to get any traction to the upside, with the bears fighting them at every twist and turn. The index remains stuck in this consolidation/trading range for now. IF this is indeed a large consolidation pattern, THEN look for breakdown to new lower low once consolidation is complete. First downside target is 1.27 fib level at 10,550 area.

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