Click chart courtesy of stockcharts.com to see full sizedThis chart shows the DJIA pulled back to the 61.8% Fibonacci level which was ALSO the old 2004 to 2006 resistance level.
In bull markets, breakouts of resistance levels that become support are healthy. When they correspond to a Fibonacci retrace, all the better.
IF the month can finish near where it started, then we will also have a very bullish “Dragon Fly Doji.” From Stockcharts.com:
Dragon fly doji form when the open, high and close are equal and the low creates a long lower shadow. The resulting candlestick looks like a "T" with a long lower shadow and no upper shadow. Dragon fly doji indicate that sellers dominated trading and drove prices lower during the session. By the end of the session, buyers resurfaced and pushed prices back to the opening level and the session high.
The reversal implications of a dragon fly doji depend on previous price action and future confirmation. The long lower shadow provides evidence of buying pressure, but the low indicates that plenty of sellers still loom. After a long downtrend, long black candlestick, or at support, a dragon fly doji could signal a potential bullish reversal or bottom. After a long uptrend, long white candlestick or at resistance, the long lower shadow could foreshadow a potential bearish reversal or top. Bearish or bullish confirmation is required for both situations.
If we can get five or six hundred points in rally before the month closes, we could get a nice looking dragon fly doji. Rally a bit more for an up month and the famed “January Indicator” would also be bullish.
Can we do it in the next three days? Stay tuned…..