DJIA: the decline continues

21 August 2017, 12:42

After Thursday, Wal-Mart Stores and Cisco Systems reported on the results, their shares fell significantly, pulling the Dow Jones Industrial Average, which dropped 1.2% (274 points) to 21751 points. This was the most significant decline since May 2017. The shares of all 30 companies, traded in DJIA, and all 11 main sectors in the S & P500 index fell.

A portion of the disappointing financial statements of companies, which include large retailers and giants of the technology sector, as well as the terrorist attack in Spain, provoked the strongest intraday drop in the major US stock indices, which was the second this month.

On Monday, there is a continued decline in major US stock indexes, including DJIA. Investors' attention this week will be focused on comments by representatives of world central banks, including Fed Chairman Janet Yellen and ECB President Mario Draghi.

In general, the negative mood of investors, the tendency to exit from risky assets and the withdrawal of funds into safe assets prevail. Thus, the yield of 10-year US bonds rose to 2.202% from 2.196%, gold quotes also remain propped up after last Friday the price of gold exceeded the annual maximum and the mark of 1300.00 dollars per ounce for a short time.

If today the decline in indices continues, it will be the third consecutive week of falling indices. The news background today for the US stock market, in general, is neutral.

Low trading volumes and investor caution on the eve of the Jackson Hole conference increase the likelihood of a short-term spike in volatility and a return of the price to the current range.

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Support and resistance levels

Having broken through the important short-term support levels 21825.0 (EMA144 on the 4-hour chart), 21755.0 (EMA200), DJIA found today support at the level of 21650.0 (EMA50 on the daily chart).

The predominant negative short-term dynamics. Indicators OsMA and Stochastics on the 4-hour, daily, weekly charts went to the side of sellers.

Probably the continuation of the correction decrease to the level of support 21500.0 (the bottom line of the ascending channel on the daily chart).

In case of resumption of growth and consolidation above the level of 21825.0 (EMA144 on the 4-hour chart), the DJIA will move towards the recent absolute maximum near the level of 22177.0.

If the decline continues, then after the breakdown of the support level of 21500.0, the target may be the support level of 20630.0 (Fibonacci level of 23.6% correction to the wave growth from the level of 15660.0 after recovery in February of this year to the collapse of the markets since the beginning of the year.The maximum of this wave and the level Fibonacci 0% is near the mark of 22000.0). Through the level 20630.0 also passes EMA200 on the daily chart. This level, therefore, is key to the bullish trend of DJIA.

Support levels: 21710.0, 21650.0, 21500.0, 21300.0, 21000.0, 20630.0

Resistance levels: 21770.0, 21840.0, 21950.0, 22060.0, 22177.0, 22300.0


Trading Scenarios

Buy Stop 21785.0. Stop-Loss 21600.0. Take-Profit 21825.0, 21950.0, 22060.0, 22177.0, 22300.0

Sell ​​Stop 21600.0. Stop-Loss 21785.0. Take-Profit 21500.0, 21300.0, 21000.0, 20630.0

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