In the "Pulling Back And To The Sideline" post, the DJIA price chart gave some indications that a bounce could be coming and also provided some possible resistance levels.
After dipping down to the 200 SMA and closed above it yesterday, the DJIA rallied and moved above the 78.6% Fib retracement today closing with a gain of more than 300 points or over 2%. From this rally, the index is sitting slightly above the 20 EMA with the declining 50 SMA hovering above it.
Is this rally a beginning of another buyable dip or just simply a dead cat bounce that caught the shorts napping? If this is another buyable dip, the DJIA needs to follow thought today’s price action by closing above the 50 SMA near 15194 and consolidate above this moving average. If it does not show any following through and dips back below the 78.6% Fib retracement, then pay attention to how the price react when it reverts back to the previous support level near the 200 SMA.
If this turn out to be another uptrend, then one could start looking for long setups and triggers to get long on this market again, otherwise continue to be patient and wait on the sideline.
As a reminder, the primary objective for a trader is to make money by buying high and selling higher and be on the right side of the trade, it is not the objective of the trader to pick tops or bottoms or to be right.