Perform a technical analysis on this stock chart: Identify where to buy, where t
ID: 2764294 • Letter: P
Question
Perform a technical analysis on this stock chart:
Identify where to buy, where to sell, support and resistance levels, future chart expectations, RSI, MACD indicator interpretation, pattterns of note, etc.
$INDU Dow Jones Industrial Average INDX 15-Apr-2016 MRSI(14) 59.61 O StockCharts.com Open 17586.48 High 1796214 Low 17553.57 Close 17897.46 Volume 17B Chg +320.50(+1.82%) 90 70 30 10 w INDU (Weekly) 17897.46 MA(50) 17264.62 18250 -MA(200) 16025.73 I n Volume 1.668,319,744 17897.45 17750 17500 17000 16750 16500 16250 4B 3B 2B 1B 15500 May Jun Jul Aug Sep Oct Now Dec 2016 Mar -MACD 12,26,9) 123.299, -40.545, 163.844 200 300 400 May Jun Jul Aug Sep Oct Nov Dec 2016 Feb Ma AprExplanation / Answer
The support level is the level of price below which the stock price seldom falls, the support level is 16025.73. And the Resistance level is the level of price above which the stock price seldom goes. The Resistance level is 17264.62 .When the support level is reached then it can be the lowest price at which the stock could trade ,at this level most of the traders would be willing to buy the stock as its cheap therefore the support level of 16025.73 signals a buy whereas when the Resistance level is reached then it can be the highest price at which the stock could trade ,at this level most of the traders would be willing to sell the stock as its very expensive therefore the Resistance level of 17264.62 signals a sell. The price has crossed the resistance level therefore it’s an opportunity to enter long position in stock and capitalise on the upward trend in near future.
The price movement has shown double bottom the price has tried to go lower twice but this found support each time. After the second bounce off the support the stock enters a new trend and goes upward. There is a rounding bottom level which signals a shift from downward trend to an upward trend. Therefore there is the expectation that the upward trend shall continue in near future.
The moving average is currently moving upwards and the price is above it indicates a upward trend in the near future. The shorter term average is above the long term average which also indicates a upwards trend. Therefore the momentum of the price is upwards to the near future. Therefore the expectation is of upward trend in the near future.
The price crossed the short term moving average shows there is trend reversal that is there is shift from down trend to upward trend. The stock is never overbought as the RSI never surpasses the 70 level and the stock is never oversold as RSI never goes below the 30 level. The RSI hovers between the 30 and 70 level which indicated that the stock has never been overbought or oversold during the given period under consideration.
When the black MACD line rises above the red signal line as happened in recently this indicates the bullish signal that the price of the stock is likely to show upward trend. The MACD crosses and rises above the signal line in Oct shows that price of the stock is likely to show upward trend and when MACD crosses and falls below the signal line in 2016 shows the bearish signal that price of the stock is likely to show downward trend.
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