Dow Jones: Negative divergence versus pin bar, closing is important In December 2014, the Nonfarm Payrolls has fallen to +252K comparing with the +353K revised in November. Although the numbers were strong after beating the estimations by +12K, while unemployment rate recorded the lowest since June 2008, but the wage data was disappointing. Actually, the Fed wanted some kind of acceleration in the wage growth to be able to tighten policy and that could make confusion about readings for traders, as negative average hourly earnings could be interpreted that, the Fed will not hike rate quickly. Back to stock market where we didn’t witness a string effect from the NFP today, as the market seems steady in its same yesterday’s range, encouraging us to have a look at technical to see whether the stock market will move higher or not? By examining the weekly chart of Dow Jones Index, we will find out that today’s closing-first weekly closing in 2015- is very important since prices have fluctuated during the week presenting a sharp bounce from 17175.00 regions. This bounce could be a sign of forming a pin bar structure, while the chart offers two negative signs as follows: The huge negative divergence formed on Relative Strength Index 14. The bearish engulfing candlestick pattern formed in the last week of December 2014. Henceforth, the contrarian between technical signs over weekly studies force us to stand aside to watch out the weekly closing and probably this neutral case will continue next week. Anyway, 17875.00 significant high and 17175.00- week’s low- are very important levels for short-term traders as breaching through one of them will pinpoint the next big move.
Posted on: Mon, 12 Jan 2015 06:53:29 +0000
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