Stocks saw a big rally on Monday, and the optimism looks set to continue on Tuesday. Today’s analysis presents You Dow Jones with a really nice bullish situation popping up on the charts.
Let’s start with the big picture. The Dow is now balancing with his Fibo at 38.2%. This often acts as a strong support. The index is inside a corrective formation, the wedge pattern (green), promoting breakouts upwards in the long term.
Most recently, the Dow created a double bottom formation (blue) at exactly 38.2% Fibonacci. In the past few hours, the index has managed to break through this double bottom formation neckline and the medium-term downtrend line (black). These factors create positive sentiment and legitimate buy signals here.
As for targets, the upper line of the wedge seems to be a good place to start. This is a medium-term goal and cannot be achieved overnight. My view on the Dow is positive as long as the price stays above the orange area. By the way, this is the high price before corona. Price ending the trading week below its support would be a sell signal, but this scenario is now less likely to occur.