Trade of the Week starting 11/04: long DJIA
In this week’s Trade of the Week, IG market analyst, Axel Rudolph FSTA, looks to go long Dow with a stop at 33,950 and target at 35,850. He also looks at last week’s trade, which was long Nasdaq 100.
Looking back: Nasdaq 100
Hello and welcome to today's Trade of the Week for the week starting Monday 11th April.
Last week, my colleague, Chris Beauchamp, looked at the Nasdaq and went long on the daily chart of the Nasdaq at 14,912 with a view of the previous uptrend continuing once a three-day corrective move to the downside had ended, and we had a bullish bar forming here whilst he was doing his forecast.
Basically, that long trade got stopped out at 14,550 because we then consecutively failed at the 200-day simple moving average (SMA) here in red for two days in a row and then came off and got stopped out.
Trade of the Week 11/04: long DJIA
Now, with regards to today's trade, I'd be interested in looking at the Dow Jones Industrial Average in view of earnings season starting this week in the US, and also because of the technical pattern I can see on this daily chart here.
What we can see is that we are probably in the midst of an A, B, C Elliott Wave corrective move lower. So, the first wave down here was Wave A, then the move up Wave B, and now Wave C to the downside. Also, what I can see here is this blue box which I've highlighted, which is made up of the 22nd of February to early March highs, and those levels come in between 34,181 and 33,979.
So, what I would like to do is to go long the Dow Jones Industrial Average at around current levels at 34,500 and place a stop-loss slightly below this support area I just mentioned at 33,950, with a view that we will be holding above that support area where you can also see the previously breached resistance line, which has now become a support line, which we bounced off last week.
As long as we stay above that whole area, I expect the Dow Jones Industrial Average to then continue and have another five-wave advance, as it did here at the beginning of the month of March and take us then above the highs of February towards the 36,500 mark or so.
So, today's Trade of the Week is to go long the Dow Jones Industrial Average at 34,550 with a stop loss at 33,950 and an upside target of 36,500.
This information has been prepared by IG, a trading name of IG Australia Pty Ltd. In addition to the disclaimer below, the material on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication. Although we are not specifically constrained from dealing ahead of our recommendations we do not seek to take advantage of them before they are provided to our clients.
Take a position on indices
Deal on the world’s major stock indices today.
- Trade the lowest Wall Street spreads on the market
- 1-point spread on the FTSE 100 and Germany 40
- The only provider to offer 24-hour pricing
Live prices on most popular markets