fbDJI Forecast | Improving US economic data bullish for DJI | IFCM

Technical Analysis DJI : 2020-02-06

Recommendation for Dow Jones Index:

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Strong SellSellNeutralBuyStrong Buy

Above 29523.1

Buy Stop

Below 29285.1

Stop Loss

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Senior Analytical Expert
Articles 1817
RSI Neutral
Donchian Channel Buy
MA(200) Buy
Fractals Buy
Parabolic SAR Buy

Chart Analysis

IFC Markets Tech Analysis

On the 4-hour timeframe DJI: H4 has risen above 200-period moving average MA(200), which is rising. We believe the bullish momentum will continue after the price breaches above the upper boundary of Donchian channel at 29523.1. A level above this can be used as an entry point for placing a pending order to buy. The stop loss can be placed below 29285.1. After placing the order, the stop loss is to be moved every day to the next fractal low, following Parabolic signals. Thus, we are changing the expected profit/loss ratio to the breakeven point. If the price meets the stop loss level (29285.1) without reaching the order (29523.1), we recommend cancelling the order: the market has undergone internal changes which were not taken into account.

Fundamental Analysis

Manufacturing sector in US resumed growing in January. Will the DJI stock index continue rebounding?

Positive US data lately buoyed investor confidence US economy is not in as dire straits as bearish analysts picture after the start of recent sell-off. The manufacturing sector resumed expanding in January: the Institute for Supply Management reported its PMI (purchasing manager’s index) rose to a six-month high of 50.9% in January, versus expectations of a 48.5%. A reading above 50% indicates expansion, while below 50% indicates contraction. And total vehicle sales ticked up in January to 16.8 million from 16.7 million in December. Meantime factory orders resumed growing in December, increasing 1.8% over month after 1.2% decline in November. And services sector continued expanding in January and that at a faster pace than in previous month as evidenced by ISM non-manufacturing PMI reading of 55.5 versus 55 in December. Improving US economic data are bullish for DJI. At the same time a weaker than expected January jobs report due tomorrow is a downside risk for DJI, though the ADP reported a higher employment growth for January than 202,000 new jobs created in December.

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