- The Dow Jones continues to diverge from the rest of the market
- Bearish divergence has been spotted on the daily chart
- Bull and Bear targets
YM Continues To Rally
The Dow continues to diverge from the rest of the market as it is now only 6% away from all-time highs. YM is up 10% in the past 3 months while ES is up only 2%.
With the ATH just on the horizon, what can we expect moving forward with the pending Fed announcement later today and the technicals on the chart?
The Parabolic Channels & All-Time High
The parabolic channels continue to give us decent targets to aim for, as well as support and resistance levels. The next parabolic curve is at $35300 and if history repeats itself, it could be an area Bulls may take profits. Above that, the next most significant level is the all-time high. If the markets perceive the Fed’s stance as bullish, we could easily see YM hit all-time highs in the next few days.
Looking at the RSI on the daily chart, there is clearly an initial phase of bearish divergence. This doesn’t mean we can expect a sell-off, instead, it may point toward a consolidation phase which means it’s a better option for both bears and bulls to wait it out. Unless you can adopt a range-bound strategy, there is very little point in initiating a position with the expectation of a move higher or lower when there is Divergence on the chart.
Targets Once The Fed Clears The Way
With the expectation of heightened volatility post-Fed announcement later today bears most immediate target would be $33566 which is the 0.23 Fib retracement and a small support pocket. Below that, targets would be $32573 which is the Fib 0.38 Fib retracement.
Bullish targets are ultimately at the all-time high, there is no significant level that is between the current price and the ATH.
As the market awaits the Feds announcement at 15:00 CT today, traders and investors must brace for heightened volatility over the next few days. Short-term trading strategies will likely become redundant due to the drastic shift in market conditions.