New Support, Narrow Range.
We gapped through the upper line of the range at 26,300 Monday and then went sideways to form a very narrow range, as marked in the 39 Minute Chart. This was a low-volatility session (after the Open) and could be a bull trap, since it is occurring at 62% Retracement of the 26,000 to 27,000 ranget. I think the line that has formed at about 26,600 is going to be important going into Tuesday.
The Daily Chart continues to show the two obvious ranges, with recent price activity moving us just above the middle of the narrow range from 26,000 to 27,000. As mentioned above, this could be a retracement point setting up for downside failure. But if we continue to see move towards 27,000 that will mean the wider consolidation is becoming more defined, implying more upside after 27,000 is broken.
DJIA – Daily
Based on Fibonacci theory (62% Retracement), we could see a downward move begin here but because of the gap up Monday, this isn’t that likely. In any case, this new Resistance-turned-Support at 26,600 is a key line to watch in the Dow Chart for Tuesday.