DJIA dominated by bears dragging the market lower throughout the day
Dow Jones Industrial Average Index (DJIA) Technical Analysis Report for Oct 28, 2020 | by Techniquant Editorial Team
Moving lower for the 4th day in a row, DJIA finished Wednesday at 26519.95 tanking $943.24 (-3.43%). This is the biggest single-day loss in over four months. Today's close at 26519.95 marks the lowest recorded closing price since July 31st. The bears were in full control today, moving the market lower throughout the whole session. Ending with a weak close near the low of the day sets a bearish note for the next session.
Daily Candlestick Chart (DJIA as at Oct 28, 2020):
Wednesday's trading range has been $604.75 (2.23%), that's far above the last trading month's daily average range of $379.93. Weekly volatility is also higher, being way above the market's average weekly trading range. The longer-term, monthly volatility is currently slightly higher than usual for DJIA.
Two candlestick patterns are matching today's price action, the Bullish Hikkake Pattern which is known as bullish pattern and one bearish pattern, the Black Candle.
The index closed below the 100-day moving average at 27250.07 for the first time since May 26th. When this moving average was crossed below the last time on February 24th, DJIA lost -3.15% on the following trading day.
Crossing below the lower Bollinger Band for the first time since September 23rd, prices have shown unusually strong downward momentum in the short-term. This could either indicate a potential selling climax after which prices might head back up towards the mean of the Bollinger Bands at 28147.58 or signal the beginning of a strong momentum breakout leading to even lower prices.
The trend is clearly bearish, showing an intact downtrend in the short, medium and long-term.
Among the 13 market conditions that our pattern recognition engine identified today, the statistics for the Price Action based market condition "Gap Down" stand out. Although it is usually interpreted as bearish, it has actually shown to be bullish for Dow Indu.. Out of 63 times, DJIA closed higher 74.60% of the time on the next trading day after the market condition occurred. The optimal exit for swing trading this condition on the long side has been after 10 trading days, showing a win rate of 66.67% with an average market move of 0.73%.
With six out of the other six Major World Indices closing lower today, the ones that stand out on the negative side are DAX losing -4.17% and NDX closing -3.93% lower. None of the markets managed to end the day in the green. Read more