{"id":19193,"date":"2021-12-01T07:30:55","date_gmt":"2021-12-01T12:30:55","guid":{"rendered":"https:\/\/www.jeffclarktrader.com\/?p=19193"},"modified":"2021-12-01T07:30:55","modified_gmt":"2021-12-01T12:30:55","slug":"watch-out-for-this-key-level-in-the-dow","status":"publish","type":"post","link":"https:\/\/jeffclarktrader.com\/market-minute\/watch-out-for-this-key-level-in-the-dow\/","title":{"rendered":"Watch Out for This Key Level in the Dow"},"content":{"rendered":"

On November 3<\/a>, we looked at the Dow Jones Industrial Average (DJIA).<\/p>\n

Back then, I wrote that the DJIA had broken out of a triangle pattern.<\/p>\n

Remember, triangles are trend continuation signals… You can be sure that when they break out, prices will run swiftly in the direction of the underlying trend.<\/p>\n

They also serve as a strong warning of what’s going to happen next. Once the thrust out of a triangle is complete, you can expect a significant move in the opposite<\/em> direction to then take place.<\/p>\n

So, the Dow breaking out of its triangle pattern was significant for two reasons:<\/p>\n

    \n
  1. \n

    First, we could expect further buying pressure, which would drive prices higher.<\/p>\n<\/li>\n

  2. \n

    Once the thrust out of the triangle is over, we can expect prices to fall back to at least where the triangle took shape on the price chart.<\/p>\n<\/li>\n<\/ol>\n

    Today, we’re going to look at what’s happened in the Dow since it first broke out of this triangle and then assess where the broader market is likely to go next…<\/p>\n

    On November 3, the DJIA closed at 36,157. Over the next three trading days, the index climbed as high as 36,565 before putting in a top.<\/p>\n

    This satisfies my first expectation of the triangle, which is a push to higher prices.<\/p>\n

    However, my initial upside target for this breakout was around 38,300. As of now, we’re still many points away from this target.<\/p>\n

    With the bearish<\/a> price action during Friday’s half-day of trading, the odds are now less certain that we’ll see the DJIA hit 38,000 or higher without first having a deeper sell-off.<\/p>\n

    In my previous essay on the Dow, I wrote that “the thrust out of a triangle is usually quite swift, and it can trap traders into overstaying in their positions.”<\/p>\n\n\n\n
    \n

    Free Trading Resources<\/strong><\/p>\n

    Have you checked out Jeff’s free trading resources on his website? It contains a selection of special reports, training videos, and a full trading glossary to help kickstart your trading career \u2013 at zero cost to you. Just click here<\/a> to check it out.<\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

    The question now is how many investors are feeling trapped… and how much pain are they willing to endure before they are forced to cover their existing positions?<\/p>\n

    I think the answer to that question lies in a key level on the price chart below…<\/p>\n

    \"Chart\"<\/div>\n

    That key level is 33,843, which is also the low from September 30 (blue line).<\/p>\n

    This is a key level because it’s the point where the triangle finished taking shape. It also serves as the starting point for the bull<\/a> run which topped out on November 8 at 36,432.<\/p>\n

    I consider this level a line in the sand that will determine whether I keep a bullish bias towards this market…<\/p>\n

    As long as prices can stay above this level, I’ll look to buy the dips in anticipation of achieving my original upside target of 38,300.<\/p>\n

    On the other hand, if sellers can take prices below this level, my bias will flip to bearish and I’ll look for opportunities to short the market on pullbacks.<\/p>\n

    This is precisely why I think identifying key levels is a crucial analytical skill for traders to have…<\/p>\n

    Key levels can serve many different purposes. For example, they can be used to help place a protective stop order and can be used as a target on a trade.<\/p>\n

    With the DJIA, we’re using this key level to determine the overall temperature of the market.<\/p>\n

    So, keep a close eye on 33,843. So long as prices can remain above this level, the case for a bull market remains intact.<\/p>\n

    Regards,<\/p>\n

    Imre Gams
    Analyst, Market Minute<\/em><\/p>\n

    <\/p>\n

    Reader Mailbag<\/h2>\n

    How do you identify key levels in the market? Where do you think the market will go next?<\/p>\n

    Let us know your thoughts – and any questions you have – at feedback@jeffclarktrader.com<\/a>.<\/p>\n

    <\/p>\n","protected":false},"excerpt":{"rendered":"

    It\u2019s essential for a trader…<\/p>\n","protected":false},"author":49,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"ep_exclude_from_search":false,"service":"","footnotes":""},"categories":[1],"tags":[],"publication":[10],"person":[76],"newsletter-type":[],"ticker":[],"class_list":["post-19193","post","type-post","status-publish","format-standard","hentry","category-market-minute","publication-market-minute","person-imre-gams"],"acf":[],"ai_tts_audio_outdated":false,"ai_tts_legacy_post":false,"_links":{"self":[{"href":"https:\/\/jeffclarktrader.com\/market-minute\/wp-json\/wp\/v2\/posts\/19193","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/jeffclarktrader.com\/market-minute\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/jeffclarktrader.com\/market-minute\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/jeffclarktrader.com\/market-minute\/wp-json\/wp\/v2\/users\/49"}],"replies":[{"embeddable":true,"href":"https:\/\/jeffclarktrader.com\/market-minute\/wp-json\/wp\/v2\/comments?post=19193"}],"version-history":[{"count":0,"href":"https:\/\/jeffclarktrader.com\/market-minute\/wp-json\/wp\/v2\/posts\/19193\/revisions"}],"wp:attachment":[{"href":"https:\/\/jeffclarktrader.com\/market-minute\/wp-json\/wp\/v2\/media?parent=19193"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/jeffclarktrader.com\/market-minute\/wp-json\/wp\/v2\/categories?post=19193"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/jeffclarktrader.com\/market-minute\/wp-json\/wp\/v2\/tags?post=19193"},{"taxonomy":"publication","embeddable":true,"href":"https:\/\/jeffclarktrader.com\/market-minute\/wp-json\/wp\/v2\/publication?post=19193"},{"taxonomy":"person","embeddable":true,"href":"https:\/\/jeffclarktrader.com\/market-minute\/wp-json\/wp\/v2\/person?post=19193"},{"taxonomy":"newsletter-type","embeddable":true,"href":"https:\/\/jeffclarktrader.com\/market-minute\/wp-json\/wp\/v2\/newsletter-type?post=19193"},{"taxonomy":"ticker","embeddable":true,"href":"https:\/\/jeffclarktrader.com\/market-minute\/wp-json\/wp\/v2\/ticker?post=19193"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}