WallStreet: Bounce on Support Line (if Sustained) Could Mark Reversal and Start of New Steep Line Towards 18000
The daily candle chart below shows the short term price history of WallStreet - a contract for difference (CFD) which aims to track the underlying Dow Jones Industrial Average (DJIA) index. Today WallStreet is trading near 17822 around time of publication - and sharply higher from sessions lows.
Last time WallStreet was reviewed in Ideas You Can Trade was in mid-February when a multitude of support had been gained, and the bullish trend was expected to continue - and subsequently did trade higher.
However, in the last two weeks WallStreet started to pullback after marking an all-time-high near 18300 - yet this pullback has bounced today on a bullish support line (yellow line on chart below) reached earlier in the session (near session lows).
If the bullish momentum today is sustained - a steep trend line similar in slope to prior such recoveries (see point 4 on chart below) should develop - and could put WallStreet back above 18000 in the very short term. Whereas if the recovery isn't sustained - and today's move is just an uptick in the downtrend - then the bearish pressure could resume with the pullback deepening towards 17000.
Below are examples of how to trade a bullish continuation or a bearish reversal:
1. BULLISH BUY ENTRY ORDER: Create a “Buy Entry Stop” @ 17875 with a Limit to take profit @ 18200 and a stop-loss @ 17638 Risk/Reward Summary: Limit risk = 325 points profit / (-237) Stop-loss risk = Gain to Loss ratio = 1.37
2. BEARISH SELL ENTRY ORDER: Create a “Sell Entry Stop” @ 17602 with a Limit to take profit @ 17330 and a stop-loss @ 17760 Risk/Reward Summary: Limit risk = 272 points profit / (-158) Stop-loss risk = Gain to Loss Ratio = 1.76
Short term chart (daily candles):