DJ30 Trading Strategy: Taking the Short End of the Market

Digital Derivatives MarketsGlobal Indices, Trade Alerts

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Dow Jones 30 Technical Analysis

The Dow Jones 30 has posted moderate gains since the 2008 financial crisis.  The DJ30 was injected with enormous amount of liquidity on a monthly basis as part of the Fed Quantitative Easing (QE) measures, which has led many to believe the moderate gains are just the beginning of a long-term bullish trend in US equities. We have been observing the ‘Hanging Man’ on the Dow Jones 30 monthly chart as a bearish signal for the upcoming quarter. Our technical models however failed to provide us with a clear entry on the monthly chart, which is why we are basing our trading strategy on the 4hr chart.

DJ30 4hr Chart

Please click on the chart to enlarge:

Dow jones Technical Analysis 05/11/14

Dow Jones 30 4hr Chart 05/11/14

The Stochastic Slow indicator has give a technical entry to short the DJ30 as negative divergence has been affirmed. The divergence is also reflected in the Relative Strength Index (RSI) and the MACD Histogram, strengthening the bearish outlook for US markets. From a fundamental angle, we are uncertain what may trigger the risk-aversion mode in global markets. Perhaps a profit realization will be sufficient to initiate the technical correction, which may allow us to shift the protective stop loss to the entry and realize partials over the short trade. Our bearish target for the Dow Jones 30 is 17,120, layering the protective stop loss order at 17,558. We are not concerned by the US Non-Farm Payrolls, due to be released on Friday, 7 November.

Updates regarding the short trade will be published at the bottom of this page. Bookmark this page or subscribe to to be instantly notified when a trade update is made. You may review all our trades in ‘Trade Alerts’ and ‘Research.’

DJ30 Trade Details

DJ30 short @ market price (17,457)
Take profit: 17,120
Protective stop: 17,558
Estimated duration: 7 days
Risk Ratio (RR):  1 : 3 (approx.)

We will monitor the progress of the DJ30 short trade based on our technical strategy and publish updates when found relevant.

07/11/14 UPDATE: DJ30 triggered our protective stop loss order before posting moderate losses as we have expected. We will revise the Dow Jones charts in order to find an entry to join the bearish trend.

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Last Updated on August 9, 2015