DJIA closes above its opening price after recovering from early selling pressure
Dow Jones Industrial Average Index (DJIA) Technical Analysis Report for Jul 31, 2020 | by Techniquant Editorial Team
DJIA ended the month 2.38% higher at 26428.32 after gaining $114.67 (0.44%) today. Trading up to $395.74 lower after the open, the index managed to reverse during the session as bulls took control ending the day above its opening price. Ending the day with an indecisive close, neither buyers nor sellers were able to gain control during the session.
Daily Candlestick Chart (DJIA as at Jul 31, 2020):
Friday's trading range has been $426.43 (1.61%), that's above the last trading month's daily average range of $346.05. 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 DJIA.
Four candlestick patterns are matching today's price action, the Dragonfly Doji, the Southern Doji and the Takuri Line which are known as bullish patterns and one neutral pattern, the Doji.
Prices are trading close to the key technical resistance level at 26504.20 (R1). After having been unable to move lower than 25992.28 in the previous session, the market found buyers again around the same price level today at 26013.59. The last time this happened on Wednesday, DJIA actually lost -0.85% on the following trading day.
Though the Dow 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 accelerate should prices move above the close-by swing high at 26602.45 where further buy stops might get activated. Selling could speed up should prices move below the nearby swing low at 25992.28 where further sell stops might get triggered. As prices are trading close to July's high at 27071.33, upside momentum could accelerate should Dow Indu. mark new highs for the month.
Among the 10 market conditions that our pattern recognition engine identified today, the statistics for the Price Action based market condition "Bullish Intraday Reversal" stand out. Its common bullish interpretation has been confirmed for Dow Indu.. Out of 415 times, DJIA closed higher 55.18% 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 63.86% with an average market move of 0.47%.
With four out of the other six Major World Indices closing lower today, the ones that stand out on the negative side are NKY losing -2.82% and FTSE closing -1.54% lower. On the flipside the best performers have been NDX closing 1.78% higher and SPX gaining 0.77%. Read more