WallStreet: Next Target Under Top of Channel Near 17,500
The short term daily candle chart below shows the price history the WallStreet contract for difference (CFD) which is trading just around 17,331 around time of publication today ahead of the market open in New York this Friday.
This CFD aims to track the underlying Dow Jones Industrial Average (DJIA) index which had reached a new all-time high yesterday of 17,275 before closing around ten points lower at a record close.
Last time WallStreet was reviewed in the Ideas You Can Trade series, in late August, resistance near prior highs was holding back the bullish momentum. Since then support was built just above that resistance level enabling the move higher from yesterday's breakout towards current prices.
The already bullish trend has become even more bullish following yesterday's move, although resistance exists just above current levels near 17,452 where a bullish resistance line that makes up the upper line of a bullish channel exists (purple line on chart below).
The upward momentum of the recent days is guiding by a short term trend line (aqua color on chart below) which should fuel the continuation, however if that line fails then a pullback could follow.
Below are examples of how to trade a bullish continuation or a bearish reversal:
1. BULLISH BUY ENTRY ORDER: Create a “Buy Entry Stop” @ 17,368 with a Limit to take profit @ 17,462 and a stop-loss @ 17,279 Risk/Reward Summary: Limit risk = +94 points profit / (-89) Stop-loss risk = Gain to Loss ratio = 1.05
2. BEARISH SELL ENTRY ORDER: Create a “Sell Entry Stop” @ 17,255 with a Limit to take profit @ 17,130 and a stop-loss @ 17,355 Risk/Reward Summary: Limit risk = +125 points profit / (-100) Stop-loss risk = Gain to Loss Ratio = 1.25
Short term chart (daily candles):
A note on CFD’s: A Contract for Difference, or CFD, is a financial contract allowing traders to potentially profit whether markets move up or down and include risk of loss. CFDs are cash-settled based on the difference in the value of an underlying asset from the time a trade is opened to the time the position is closed. A list of available CFDs that can be traded with WorldWideMarkets.com (WWM) can be found on the WWM website.
In addition to CFDs, WWM - through a third-party - offers direct access to non-US residents to trade exchange trade equities on the US Stock Markets, with more information also available via the WWM homepage.