"Wall Street tumbled Friday, taking the Dow Jones industrials down nearly 400 points, on a pair of alarming economic developments: oil prices that shot up by more than $11 a barrel and approached $140 for the first time, and the biggest gain in the government’s unemployment reading in more than 20 years."
This is the Headlines on Yahoo Finance. According to fundamental analysis, the possible reason are the oil prices and unemployment rate. However, technical analysis did show a warning sign sometimes ago.
I have been very cautious since May 20 as the Dow Jones Stock Market Trends resisted at 200d MA and warning of a pull back. Next Dow Jones indeed pull back to 50d MA , unfortunately, it continued to break the 50d MA support and go down further. Then, Dow Jones was testing the 100d MA on the 1 June .
Finally, the 100d MA also gave way and it resulted in a 400 points decline in a single day, forming a big black candle. At the same time, you can also notice that lower high and lower low was formed on the chart, implying that the stock market is in the down trending channel now.
Where is the next support, there isn’t any significant moving average support below the 100d MA now, so, it is likely that the immediately support is the previous low which the market can be re-testing the 11746 level again.
So, I am sure you can now appreciate better how the moving average are so useful in helping us analysing the stock market trends. Moving average always act as a support or resistance, the significant moving average lines are 20d, 50d, 100d and 200d, while 200d is the most strong support or resistance.
DISCLAIMER: This information is used for learning purposes only. It does not constitute an offer or solicitation to buy or sell. You should do your own analysis on top of my postings.
