01/20/09_MajorMoves by Chi2
siliconinvestor.com
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Ed Downs commentary for 01/20
Winding Up..
Dow trades back and forth in volatile session, winds up within clear range.
From prior commentary, "...Watch 8,300 for signs of strength out of this pattern, especially if the index can rally through 8,370..."
The Dow opened the day with early strength this morning, as the index tested the clear 8,300 near-term resistance level right out of the gate, seen in the 15 Minute Chart. The index failed at about 8,340 and dropped back to 8,100 before rallying into the Close, eventually ending the day with a gain of 69 points.
The Daily Chart shows the Dow has redrawn the boundaries to the large triangle range that continues to develop at the overall lows. This large range will be the pattern that sparks the next major directional move ahead. Eventually, a breakout could spark a move of about 2,000 points, so this range is very important.
Short term, the Dow has built out a three-day consolidation range above the lower boundary of the large triangle, seen in the 60 Minute Chart. This is typically indicative of an upside reversal off the lower trend line. If the Dow remains above 8,000, we could see another move back up within the range toward the 8,500 to 8,600 level, if not higher.
Watch 8,350 for early strength, and 8,400 for confirmed strength Tuesday. Otherwise, a break back below 8,100 will likely spark another big test of the 8,000 level.
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