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Analysis

Chart of the week – Dow Jones Industrial Average (US 30) potential enroute to fresh all-time high

Dow Jones Industrial Average

Chart of the week – Dow Jones Industrial Average (US 30)

Dow Jones Industrial Average (US 30) potential enroute to fresh all-time high

Short-term technical analysis

Time stamped: 12 Dec 2021 at 12:00pm SGT (click to enlarge chart)

Source: CMC Markets

  • In our previous “Chart of the week” feature for the “Week Ahead Newsletter, 29 November to 3 December 2021”, the Dow Jones Industrial Average (US 30) has tested the predefined 34,110 short-term pivotal support (without a 4-hour close below it) and staged the expected rally to hit the 35,900 resistance/target (printed a high of 35,982 on 10 December). Where do we go from here?
  • During the prior pivotal week in terms of news flow & economic data release (official default labelling on indebted Chinese developer Evergrande’s offshore bonds & the red-hot US CPI print for November), the price actions of Dow Jones Industrial Average (US 30) has managed to maintain its upside momentum and ended with a weekly “Bullish Marubozu” candlestick after a retest close to its 50-week moving average in the week of 29 November.
  • Hence, the latest set of price actions seen on the weekly chart of US 30 suggests that it may continue its major impulsive up move sequence (multi-month) towards the potential 38,450/40,000 risk level (the potential terminal zone of the long-term secular uptrend phase in place since Mar 2009 low).
  • In the short to medium-term as depicted on the 4-hour chart, key technical elements are still supportive to advocate for a further potential push up in price actions. Firstly, Elliot Wave/fractal analysis suggests that price actions continue to evolve within a potential minor impulsive up move sequence since 2 December 2021 low of 33,951 and last Friday, 10 December bullish breakout above the prior resistance of 35,920 (that led to previous drop of -5%) has indicated that the latest rally may be the minor wave v up move to complete the entire 5-waves minor bullish impulsive up move sequence of 1/ before the risk of a minor pull-back/consolidation sets in.
  • The 4-hour RSI oscillator remains in a bullish configuration above a key corresponding support at the 56% level and has not hit its extreme overbought level. These observations suggest that short to medium-term upside momentum remains intact.
  • If the 35,500 key short-term pivotal support holds, the Dow Jones Industrial Average (US 30) may continue its ascend to retest the current all-time high level of 36,564 before another potential rally towards the 36,800/875 resistance zone (upper boundary of the ascending channel from 2 December 2021 low & Fibonacci expansion level).
  • On the flipside, a 4-hour close below 35,500 negates the bullish tone for a minor corrective pull-back towards the 34,900 key medium-term pivotal support.


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