Did the recent sell-off catch you unaware?

Prior to this week’s sell-off the market had been moving within a range. However, when the Dow Jones index closed below the 800 level last week, a strong signal was given. A psychological support level was broken on the weekly charts. If you have a good look at the weekly chart, you’ll notice that even though the index had dropped below 8000 a couple of times, it always rebounded and never closed below it. The 7400 level on the daily chart is another significant level in that it represents a one year low. Statistically, if an instrument makes a new one year low it tends to continue the downward movement. If the market fails to hold this support level, there is a possibility that it would head towards the 7000 for support.

Take a look at the daily, weekly, and monthly charts.

Happy trading