What is now very interesting is that both on the short term and intermediate term time frames the index has posted buy signals. The index found support at the 11877 Fibonacci level.
With a low in at 11731 and a double bottom formation, the Dow has rocketed higher.
Not only do we have the market back above its 20 day moving average but momentum indicators have also registered a positive signal and suggest that we may be about to start a leg to the upside.
However we must be a little cautious before turning long term bullish. Until we can see a clear break above 11767 which is the February high the overall pattern remains in a sideways mode. We do have Fibonacci levels of two degrees providing a resistance barrier between 11614 – 12707 which must be cleared for a continuation to the upside. We could also see a potential triple top formation at this level but that remains to be seen.
The 14th - 21st March time cycle may be in but we will know this once the index has cleared the resistance levels. Our focus to the upside if momentum follows through could come in at 12916 which is the 50% retracement of the major high.
If any bad news creeps out in the coming weeks, beware that sudden moves could still take the index much lower than the January low of 11634 which could also complete the five wave pattern to the downside.
Sandy Jadeja is Chief Market Strategist for ODL Markets and founder of www.Spreadbettingtowin.com where he teaches low risk trading strategies and money management.