Four Weeks of Range Bound Activity is About to Ignite!
"I hate weekends because there is no stock market." ~ Rene Rivkin
Although the dollar has been sliding and stock markets and are flirting with yearly highs, how are markets shaping up over the past four weeks?
We start with the Dow Jones which is virtually at the 2010 high but the past four weeks of action looks rather dire and suspicious.
Dow Jones Four Hour Chart
The chart above shows the range of the past four weeks marked out by the red range lines. Alarmingly the Dow Jones has been travelling in around a 300 point range from 10900 to 11200.
What would this mean over the short term?
It seems like we are about to find out within the next two weeks!
A failure at current levels could prompt a decline towards the lower end of the range (marked by the yellow forecast trend lines), a snap of which would be detrimental for price action.
The other scenario is a possibility of a breakout - fake out! A marginal high under 11300 should instantly have price move back into the range after which it slides to the lower end of the range.
11250 is standing firm but a high above this level may be the perfect setup for prices to swing lower. This can be seen by the blue forecast trend line.
The upward price action will be apparent to all, however in reference to the chart above, we at TMS, will be happy to view it as range bound activity. One in which can trap the majority with a decline from here or a decline from a marginal new high. The closing price today will be very important as the 11200 juncture is seen as failure point so far. Will they reject it again or play the sucker move?
The Euro story is not that different...
Whilst the Dow Jones has been in a 300 point range over the last month the Euro has been in a 400 point range over the past month. This range might sound fine but it's not and simply put it is basic sideways action. The chart below shows more:
Euro Four Hour Chart
The red trend line shows the 400 point range over the past month. From the incline of this red line you can see that the upside hasn't been that exciting and in reference to this a few failure lines have been pitched.
We have a high probability for failure at the intersecting blue counter trend line marked by 'A'.
Another failure region is the top blue line 'B' which may occur but we will find out over the next day or so.
We expect price to move back quickly to the recent yellow breakout line marked by 'X'. When this gives way a sharp move to the base trend line 'Y' will be seen and if snapped a quick route to 132 will be likely.
Although many view the recent action for the Dow and Euro as exciting times as price seems to be moving higher, we view the action as dull range bound movements but over the next few days to a week it seems likely that price action will sparkle to life!! Don't blink or look away from your screens now as the real moves look like igniting soon!
Once again TMS would simply like to warn about sudden dollar rallies which could start to surface in the coming months if not coming weeks and this will rock major markets that are moving in line with the current dollar decline.
For the first time ever TMS has made a 6 month subscription package available to our global audience in which an exclusive rate has been issued for a limited time only. All our annual subscription packages were snapped up immediately and unfortunately will not be offered again until some point in 2011. Having been bombarded with requests to bring back a package rate we have decided to tailor a 6 month package for new clients whilst also giving a chance for our current monthly subscribers to join us at a rate in which the availability will soon finish - TMS will only allow for the availability of 100 places (Hurry only 41 remaining). TradingMarketSignals.com 6 Month - Exclusive
Tweet
Circle Us