I do not trades stocks or indexes at all but technical analysis can be applied to any instrument so this is my view on the DJ Index.
The DJI has had an incredible run since March 2020 (18183) to the high of 36855 made at the beginning of the year. What were the reasons for this?
1) Low to no interest policy of the FED
2) Optimism of recovery from Covid and vaccine discovery.
3) Free money being available and a lot of amateur traders getting into the market
This Index however has run out of steam. Technically speaking, there are massive reversal signs that are in play since May 2021.
1) Weekly Overbought on RSI
2) RSI Divergence on the weekly chart
3) Head and shoulders pattern complete
On a fundamental side we have:
1) Interest rate increase to combat inflation
2) The China lockdown
3) An energy crisis
4) The sad invasion of Ukraine
The year long consolidation between 34000-36000 is a dire warning that the market is in consolidation for a big move. It is very unlikely to be up and we are looking at the intial levels of 30,0000 and then 26,000.
If the consolidation lasts for a few months, these levels will not hold and we will see a bigger drop. There is no timeline on the weekly chart, but let's revisit this chart in July, October 2022 and January 2023 to see where the market is at.
The DJI has had an incredible run since March 2020 (18183) to the high of 36855 made at the beginning of the year. What were the reasons for this?
1) Low to no interest policy of the FED
2) Optimism of recovery from Covid and vaccine discovery.
3) Free money being available and a lot of amateur traders getting into the market
This Index however has run out of steam. Technically speaking, there are massive reversal signs that are in play since May 2021.
1) Weekly Overbought on RSI
2) RSI Divergence on the weekly chart
3) Head and shoulders pattern complete
On a fundamental side we have:
1) Interest rate increase to combat inflation
2) The China lockdown
3) An energy crisis
4) The sad invasion of Ukraine
The year long consolidation between 34000-36000 is a dire warning that the market is in consolidation for a big move. It is very unlikely to be up and we are looking at the intial levels of 30,0000 and then 26,000.
If the consolidation lasts for a few months, these levels will not hold and we will see a bigger drop. There is no timeline on the weekly chart, but let's revisit this chart in July, October 2022 and January 2023 to see where the market is at.
29th April - DJIA at 32977
The drop so far - 1815 points (5.2% in a week)