WallStreet: Today's low is on the lower support line of the medium term bullish channel - a key area to watch
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 17820 around time of publication and near session lows which was 17793 as of writing.
Earlier in April in Ideas You Can Trade WallStreet had just regained 18000 in the previous post - but subsequently failed to reached its prior high above 18200 on April 27th. Since then lower-highs have been made as prices are narrowing and today the session low coincided with the lower support line of the medium term bullish channel (see yellow channel on chart below).
If this lower line of the channel fails then a sharp drop should follow, whereas if support holds then a bounce from here could lift WallStreet back up, although the surmounting bearish pressure of global stock market indexes moving lower today and the US Dollar also weakening further could fuel bearish momentum - unless this support line holds. Therefore, traders may watch this line closely as an area of interest in forecasting the next move.
Below are examples of how to trade a bearish continuation or a bullish reversal:
1. BULLISH BUY ENTRY ORDER: Create a “Buy Entry Stop” @ 18000 with a Limit to take profit @ 18169 and a stop-loss @ 17850 Risk/Reward Summary: Limit risk = 169 points profit / (-150) Stop-loss risk = Gain to Loss ratio = 1.12
2. BEARISH SELL ENTRY ORDER: Create a “Sell Entry Stop” @ 17789 with a Limit to take profit @ 17650 and a stop-loss @ 17893 Risk/Reward Summary: Limit risk = 139 points profit / (-104) Stop-loss risk = Gain to Loss Ratio = 1.34
Short term chart (daily candles):