Dow Jones Signals Potential Trend Continuation After Printing Rejection Signal on a HL
The Dow Jones and the S&P have been the best trending markets the last few months.
When these trends get going, they can really fire up and last for large periods of time. Very useful to have on your watch list, especially when the currencies are not playing nice.
During these up trends, I am looking for any good reason to buy, and get on board with the trend momentum.
The 8 hour chart shows a nice bullish rejection candle here off a potential higher low.
This aligns well with a good buying position on the daily chart, as the daily we seen the Dow bouncing off previous highs (a swing level)
The 8 hour bullish rejection candle could be the early want signal for swing traders, and provide a high ROI if the trend continues and pushes into higher highs.
Fake Out Then Break Out!
My initial analysis was correct, the Dow went up!
But everyone can be an expert in a bull run on these markets, forecasting higher prices easily 🙂
The tricky part is timing a trend entry, and in this case – we would have had some salty traders get run out of buy positions after a fake out occurred!
I was very lucky to dodge this fake out, I spotted some very bearish price action on the daily, and decided to close this off at break even and jump over to the S&P instead.
The fake out here was a temporary push down past the support into lower lows. This move quickly did a sling shot move back up with strong bullish presence.
This is a classic ‘fake out’ move by the price action, and they usually happen in likely areas for stop losses.
However, these fake outs can be turned into trade signals within themselves for the patient. This fake out communicated lower prices were not desired and the market did follow through to the upside with big strength.
So the initial rejection signal we spoke about above may have worked out, depending how generous you were with your stop – but chances are the fake out snagged you.
Keep an eye on these fake out moves – they can reveal the tricky behind the market and help you anticipate what’s going to happen next.
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