Established in 1974
185,800 clients worldwide
Over 15,000 markets

Dow could move higher

Price at time of writing – 16,530.

The Dow Jones has moved into a very interesting position again. Last Friday saw another attempt to break above my key 16,559 level, but was again quickly rejected.

Although there was no follow-on momentum behind the move, I am raising my recommendation to neutral as a result. Short positions should therefore be closed.

The recent profile of the sideways drift just beneath 16,559, and its ongoing refusal to find any traction below my former target of 16,175, lead me to think the Dow’s next significant move will be upwards. Both traders and investors should be fully prepared for a move to a new and higher trading band, and the next target band defined. I have updated today’s chart in readiness, and clearly highlighted the next resistance lines at 17,778. A move to such a level would fulfill a 1000% rise from the major low that followed the 1987 stock market crash.

It appears that each pull-back from 16,559 is progressively less determined. Given this, the next break above 16,559 should be used as the trigger to buy the index outright.

Recommendation: neutral. Buy on the next break above 16,559. The target then becomes 17,778.

Dow Jones chart

The information 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 Bank S.A. 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 and as such is considered to be a marketing communication.