Conflicted As Earnings Season Begins

Dow Jones Forecast:

• Fibonacci ranges on the Dow Jones are displaying key spots of potential help and resistance
• MACD signifies costs are buying and selling above the zero line
• Will fears surrounding the pandemic result in a dump or will earnings deliver favor to bulls?

Can Bears Break Help Stage held by Fibonacci

As the start of the week kicked off the beginning of earnings season, merchants within the Dow Jones flocked the market with big selection of expectations. Bulls reacted with optimism as PepsiCo reported higher than anticipated Q2 earnings and this was furthered when Pfizer elevated hopes for a coronavirus vaccine. Nevertheless, because the rise in instances resulted in California returning to lockdown, bears retaliated, pushing the Dow Jones again to the extent of prior resistance proven by a key Fibonacci stage.

The month-to-month chart under highlights the Fibonacci retracement (pink) taken from the August 2015 low to the February 2020 excessive.

The Dow Jones is presently buying and selling round a key space of confluence on the chart. Regardless of a big restoration from the March 2020 lows, the Fibonacci stage continues to supply an space of resistance, holding the bulls at bay.

Dow Jones Month-to-month Chart

Chart created by Tammy Da Costa, IG

MACD Stays Above Zero Line

Though each bulls and the bears proceed to battle it out, the hourly chart exhibits the shifting common convergence/divergence (MACD)indicator remains to be buying and selling above the zero line. Whereas the MACD represents the distinction between two exponential shifting averages (on this case, the 21 and 55 EMA), the MACD will also be used to point overbought or oversold territory.

Dow Jones Hourly Chart

Chart ready by Tammy Da Costa, IG

As a result of the MACD is often used to establish the momentum and path of development, the truth that the MACD is above the zero line could also be an invite for bulls to begin in search of triggers in the identical path. On the flip facet, when the MACD crosses to the draw back, bears could interpret this as a sign {that a} deeper sell-off is predicted, with the MACD crossing under the zero line as affirmation that additional draw back could present whereas keeping track of these key areas of help and resistance offered by Fibonacci.

The place to from right here?

On the time of writing, IGCS signifies that bears are dominating the market, with 65% of retail merchants holding quick positions in Dow Jones. We sometimes take a contrarian view to crowd sentiment, and the very fact merchants are net-short means that the Dow Jones could proceed to rise.