Consolidating
Dow consolidates at resistance.
From prior commentary, "...The index ended the day right at the solid 9,280 resistance level, seen in the 60 Minute Chart, which will be our main focus Monday. The Dow has turned down precisely off this resistance level twice in the past two weeks, so we will want to keep a close eye on the activity around it for Monday's trading..." The Dow continues to hold at resistance, as the index formed a very tight consolidation at the highs of the current upmove, as seen in the 15 Minute Chart. The index consolidated throughout the session in a tight range from 9,235 to 9,305, which we will watch closely tomorrow.
The fact that the index was able to hold on to Friday's big gains is positive heading into tomorrow's market. An upside break typically occurs when a consolidation has formed at the highs. Therefore, an upside break at 9,305 will indicate further upside movement.
However, a downside break from the consolidation will be just as 'potent' as an upside break. In fact, the consolidation is forming a rectangular pattern, which is one of the most powerful patterns to trade on breaks - in either direction. So, we will also pay attention to the lower boundary of the tight range at 9,235. A break here will likely push the index back down within the wide trading range, seen in the 60 Minute Chart.
Short Term Dow
The Dow has formed a tight range from 9,240 to 9,300, seen in the 5 Minute Chart. A break from this range will likely spark a move in the direction of the break for tomorrow's Open.
Medium Term Dow
In the medium term, we entered the market Short this morning at 9,240, but took a 10 point loss in the position. We later entered the market Long at 9,300, but were stopped out a second time there. We are currently out of the market and will watch 9,225 down, and 9,315 up, with 10 point stops.
NASDAQ & S&P
The NASDAQ and S&P each consolidated alongside the Dow today, forming very tight ranges at the highs. Watch these ranges tomorrow. *
Summary
The Dow traded sideways the entire session today, forming a clear consolidation at the highs right at the major 9,280 resistance level. A break from the consolidation should be traded tomorrow. Watch 9,225 down, and 9,315 up.
Thanks for listening, and Good luck in your trading..
Ed Downs
edowns@nirvsys.com
with assistance from..
Frank Ochoa, Market Analyst
fochoa@nirvsys.com
** Note: We are now posting Index entries and exits in Real Time, through our new Intraday Index Alerts service. To learn more about the service, visit SignalWatch.com and select Intraday Alerts from the main navigation bar. - SW Team
_________________________
Rules and Definitions
