DJA pushes through Thursday's high
Dow Jones Composite Average Index (DJA) Technical Analysis Report for Jul 31, 2020 | by Techniquant Editorial Team
DJA finished the month 4.94% higher at 8701.84 after gaining $45.38 (0.52%) today. Trading up to $126.60 lower after the open, the market managed to reverse during the session as bulls took control ending the day above its opening price. Closing above Thursday's high at 8666.62, the stock index confirmed its breakout through the previous session high after trading up to $39.74 above it intraday.
Daily Candlestick Chart (DJA as at Jul 31, 2020):
Friday's trading range has been $172.02 (1.99%), that's far above the last trading month's daily average range of $105.40. Things look different on the weekly timeframe, where the market's trading range of the last week has been slightly below the market's average weekly trading range. The longer-term, monthly volatility is currently slightly lower than usual for DJA. Prices continued to consolidate within a tight trading range between 8534.34 and 8715.36 where it has been caught now for the whole last trading week.
In a volatile session, prices traded above the prior day's high as well as below the previous day's low, forming a bullish Outside Bar. Although trading as low as 8534.34 during the day, Dow Comp. has decisively rejected those price levels and formed a bullish Pin Bar closing $167.50 above today's low. The last time this happened on October 3, 2019, DJA gained 1.35% on the following trading day.
After trading down to 8534.34 earlier during the day, the index bounced off the key technical support level at 8613.67 (S1). The failure to close below the support could increase that levels importance as support going forward.
While DJA is currently in a short-term downtrend, this might just be a correction, as both the medium and long-term trends are still bullish.
Buying could speed up should prices move above the nearby swing high at 8715.36 where further buy stops might get activated. As prices are trading close to July's high at 8782.46, upside momentum could accelerate should the market mark new highs for the month.
Among the eight market conditions that our pattern recognition engine identified today, the statistics for the Price Action based market condition "Closed above last periods high" stand out. Its common bullish interpretation has been confirmed for Dow Comp.. Out of 406 times, DJA closed higher 54.43% of the time on the next trading day after the market condition occurred. The optimal exit for swing trading this condition on the long side has been after 10 trading days, showing a win rate of 65.02% with an average market move of 0.31%.