Charting the Dow Jones Industrial Average ($INDU)

Last week closed at the high end of its weekly range. That’s typically a bullish sign for a chart, but this morning futures are a little bit down. We’re starting to learn that the direction for the morning doesn’t mean a thing for the afternoon direction, but I still see it as interesting. That’s especially interesting after looking at the trend line I’ve drawn as line C on this week’s chart. Line C acted as a ceiling for the bounce last week. It’s a shorter-term line, but has been the ceiling three times so far. The steep lines like this one never last too long, but it really hasn’t been very long yet.

Line B shows the declining line of lower lows after the last week’s high in July. We crossed through that line once during the Hell day two weeks ago and I think we’re heading back to it to test that 12,500-ish point. As charts tend to do, there’s support for this theory. It’s line D. Line D is the one I wrote about last week that is the longer trend of higher lows. If the decline comes soon, lines B and D could meet around 12,500 and provide support at the same time as re-testing the previous recent low. Moving above 13,500 will be a bullish signal since it seems to be developing as a bump in the road.

Click on the thumbnail for the chart: