At second attempt, the Dow has again found resistance at the underside of the broken trendline of the rally that began on July 15th. The previous attempt 3 trading sessions ago saw a sell-off of over 200 points. Resistance at this level coincides with the 38.2% Fibonacci extension level from the May 19th to July 15th sell-off low. Diminishing volume over the summer months tends to favour upside price action; however the divergence may result in a trend reversal. A short position with stop on a weekly close above 38.2% Fibonacci extension level may serve as a low-risk trade.
Conversely, the S&P500 has broken and closed above the 38.2% Fibonacci extension level from the May 19th to July 15th sell-off low. An upside target at approx 1310 at a gain of 0.77% will bring price action toward the underside of the of the broken trendline of the rally that began on July 15th.
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