DOW JONES Can the 1st Golden Cross since Aug 2020 save the day?

Yes the Dow Jones Industrial Average Index (DJI) formed a Golden Cross on the 1D time-frame (1D MA50 (blue trend-line) crossing above the 1D MA200 (orange trend-line)) for the first time since August 05 2020 (!) with the price approaching today the 1D MA50, the closest it has been since October 24. Can this provide Support and save the day for Dow preventing it from having a similar sell-off as in August - September and May - April?

Well we have to look at it step by step. As long as the price closes daily above the 1D MA50, we have a positive sign that the market treats it as Support. At the same time closing above the former Lower Highs trend-line (since the January 04 High) puts additional buying pressure. That will help at forming a Megaphone pattern (green dashed lines), which can be the necessary transition tool that offers the needed pull-back on profit taking and takes the index into the new Bull Phase.

At the same time keep an eye on the 1W MA50 (red trend-line), which was previously the Resistance of most of the 2022 correction and made the August 16 rejection. Prior to the 2022 correction, the 1W MA50 has been the absolute Support of the 2021 rally. If all the above keep supporting, we can expect Dow to test the 35550 (April 21 High) Resistance by the end of January.

On the other hand, a closing below the 1D MA200 will most likely initiate a sell-off that will reach at least as low as the 0.618 and 0.786 Fibonacci levels, similar to what happened in September and April.

Additionally, the RSI on the 1W time-frame got rejected on the Higher Highs trend-line that since February has caught all major peaks. It can be used as a very effective buy indicator as well as its Higher Lows trend-line has also caught all major Lows since May 23. On a side-note, this 1W RSI Channel Up can be a major bullish divergence signifying the trend change to long-term bullish.


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