Dow Jones closed higher yesterday for the fourth consecutive trading day. This is a week when important economic data from the United States dominated the price action. Initial jobless claims yesterday added to the mixed picture, and Trump’s tweet regarding the upcoming jobs report fuels expectations of a solid report.
The NFP week, especially during summer, has a special feeling. The price action is typically influenced by trading algorithms, and correlations dominate.
So far this week, the Dow Jones did what it was supposed to do – grind higher closer to the NFP release, putting pressure on bears. And bears did feel the head, considering that Dow Jones managed to close in the green each day of the week so far.
Is the rally strong enough for an even higher push? The technical picture says yes.
Dow Jones Technical Picture
If a picture is worth a thousand words, then there is not much to add to the chart below. After the panic crash in Mach, the price action reversed dramatically.
As it is often the case, sharp declines are followed by a slow grind higher. Therefore, a new attempt at the highs is due, although pullbacks are not out of the question.
So far, each pullback met buyers ready to enter the market on the long side. Due to it, the bullish trend respects the higher highs and higher lows series that defines it.
To trade a break higher, wait for the Dow Jones to break above the previous higher high. On a positive NFP report, that break might come today. Next, place a stop-loss order to the 26k level. A break there would invalidate the higher lows series and this thesis. Also, look for a new all-time high for Dow Jones. Considering that the 30k is just slightly above the recent highs, it looks like a good place for the initial target. Lastly, trail the stop after the price reaches the initial target.