We have seen a 7% correction in Dow. It is trading close to its 200 DEMA but more importantly it has hit RSI oversold zones. Suchlike previous RSI transitions have led to a strong bounce. Also, further dips will take it to trend line/channel supports. We recommend that you buy call from cmp or get in slowly in the dips to 15k-15,300. A reversal above any day's highs on hourly basis could also be a turnaround signal. We have seen a correction from approx 16,500-15,300 levels happened in a short period of time.
We are highly oversold at current levels in the daily and hourly charts. Every time when the RSI touch 20 levels, we saw a strong bounce back . In a worst-case scenario, we can see 14,800-15,000. The market will give some good bounce, if another low comes. So we can see a positive divergence in RSI which may lead to a strong rally. We can observe double bottom at the level 15,356.
Support: 15,300, 15,000, 14,800
Resistance 15,500, 15,700, 16000
In the hourly chart, we can observe positive divergence in RSI from 15,880 levels. So it is likely to bounce back to the target somewhere around 15,700-15,800.
Intra-Resistance: 15,478, 15,532, 15,700
Recommendation-
Below 15,356 the price is seen to fall another 300-500 points, which will be an interesting entry point.
The material has been provided by InstaForex Company - www.instaforex.com
For detail explanation and best discovery on market trends you may visit via Technical analysis of DJIA for February 05, 2014 . Thanks for your support on Technical analysis of DJIA for February 05, 2014
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