Dow Industrials Hourly ChartDow 10000 has always been a bit of a magical number to the financial media and the casual investor.
From the point of view of the technical analyst, it is just another number like Dow 9253 is or Dow 10785.24, for that matter. But, on occasion, price levels that have previously had no significance whatsoever on the charts can provide resistance/support and/or get broken briefly, before a trend reversal occurs. It is uncanny, how psychological levels often act as such; as potential contrarion sell/buy signals, if you will.
Nevertheless, the motivation behind this posting is less about waxing philosophical about contrarionism and so on, than it is about a potential inverted head & shoulders formation (see head & shoulders bottom education article in 'The Study') on the hourly chart of the Dow Industrials. The formation happens to call for a move to ~10105, which of course would take the index across the psychological Dow 10000 mark, over the coming sessions, as long as the index can stay above the neckline (9765) of the formation in the interim.
You'll notice this inverted head & shoulders pattern on the accompanying chart. The formation began in the second half of the final trading week in September, during which time the left shoulder of said pattern formed. Over the next week or so, the head of the pattern formed. And, in the few sessions that followed, a right shoulder was formed.
The intervening peaks formed at almost exactly the same level - 9765, give or take. Prices broke through this resistance level - the neckline - in the middle of the week that has just passed. After a little follow-through, there was a retest (return move) to the neckline, which promptly provide support and sent prices on their way towards the minor highs that were set just over two weeks ago.
Using the "depth" of the head as a guide - and assuming that prices stay above the neckline at 9765 - a target of 10105 is what the patterns calls for.
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From the point of view of the technical analyst, it is just another number like Dow 9253 is or Dow 10785.24, for that matter. But, on occasion, price levels that have previously had no significance whatsoever on the charts can provide resistance/support and/or get broken briefly, before a trend reversal occurs. It is uncanny, how psychological levels often act as such; as potential contrarion sell/buy signals, if you will.
Nevertheless, the motivation behind this posting is less about waxing philosophical about contrarionism and so on, than it is about a potential inverted head & shoulders formation (see head & shoulders bottom education article in 'The Study') on the hourly chart of the Dow Industrials. The formation happens to call for a move to ~10105, which of course would take the index across the psychological Dow 10000 mark, over the coming sessions, as long as the index can stay above the neckline (9765) of the formation in the interim.
You'll notice this inverted head & shoulders pattern on the accompanying chart. The formation began in the second half of the final trading week in September, during which time the left shoulder of said pattern formed. Over the next week or so, the head of the pattern formed. And, in the few sessions that followed, a right shoulder was formed.
The intervening peaks formed at almost exactly the same level - 9765, give or take. Prices broke through this resistance level - the neckline - in the middle of the week that has just passed. After a little follow-through, there was a retest (return move) to the neckline, which promptly provide support and sent prices on their way towards the minor highs that were set just over two weeks ago.
Using the "depth" of the head as a guide - and assuming that prices stay above the neckline at 9765 - a target of 10105 is what the patterns calls for.