Mikula Forecasting Company

$INDU 60 Minute Chart Analysis

In this posting I am going to discuss analyzing the Dow 30 industrial average using the eSignal symbol $INDU. All the charts below are 60 minute charts. On the first chart below, I have added the MarketWarrior indicator "High Low Reversal" and "Square of 9 Chapter 2". The indicator High Low Reversal draws a dot above or below the price where the indicator believes a pivot will occur. The indicator Square of 9 Chapter 2 draws support and resistance price lines. On the chart below, on Nov 4, the price is forming a consolidation on a Square of 9 price line and the High Low Reversal has drawn a dot indicating a potential top. These two indicators are telling us this market may make a top soon.



On the next chart I have added the MarketWarrior Swing Projector. There are a few items of interest being drawn by the Swing Projector. First, there is a "Large Pivot Warning Symbol". Second, there is a Warning Line. The Warning Line indicates the next top has a higher than normal probability of being a significant top for swing traders to sell short into the next down swing. The Large Pivot Warning Symbol indicates the conditions for a top have been met and a top may occur at any time. In this situation a swing trader would watch for the first indication of a downward Change In Trend (CIT) and would sell short.
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On the third chart below I have added the two momentum indicators "Detrend Momentum" and "Smoothed Stochastic". You can see both momentum indicators formed a lower top at P2 below P1. The price made a higher top at P2 than P1. This is an example of Bearish Divergence. The price is moving higher but the indicators are showing a loss of momentum. This indicates the price may make a top soon.



The final chart shows what happened on this 60 minute chart the next day Nov. 5. You can see all the indications of a market top were shown to be correct and the market fell making Nov 4 a swing top. The swing trader would have been watching the market Nov 5 for any signal the market was turning down and would have sold short into this down move.