Since our last post the Dow Jones has reached 24830 and pulled back towards the long-term broken trend line resistance which is now support. This back test, if followed by a new upward move, will be successful and we can see another run in DJI above 25k.
The last two daily candles have touched the broken trend line. Price remains above it. Yesterday's candle is a bullish reversal hammer. This increases the chances that this was a successful back test and we can now resume to the upside. Support is at 24300 and a break and daily close below it will not be a good sign for bulls. On the other hand, a break above 24830 will be a very bullish sign.
Taking a closer look in the 4-hour chart, we first observe how price respects support levels and how the RSI is giving a bullish divergence. The rectangles show the important support area between 24300-24400. Bulls need to break above 24830 otherwise a rejection or a lower high could put this bullish move in danger for a bigger decline and a false breakout.
Concluding, the setup so far favors bulls. However, the key level to get a bullish confirmation is at 24830. Close above it and we good to go. A rejection, a lower high or a break below 24300 will be against bulls.
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