Hello and welcome to this week’s Trade of the Week for the week beginning Monday 18th July.
Last week’s trade: short DJIA
Last week’s Trade of the Week was to go short the Dow Jones Industrial Average, and we did so, on this daily chart, at 31,185.
We had a small risk because we put our stop-loss on this short position above the previous high, which was at 31,510. And, our downside target was just above the previous lows at 30,400. It took a few days for us to be profitable but we made 785 points on going short on the Dow last week.
This week’s trade: long DJIA
Now, this week, what has happened is that we’ve had a bullish reversal last Friday, and today we’re breaking through the three-month downtrend line. And we’ve also taken out, or are in the process of taking out, the previous high from earlier in July at 31,509.
So, therefore, our Trade of the Week, from a technical perspective because we believe that the market has based and that the summer rally is about to start, is to go long the Dow Jones Industrial Average at 31,300.
So, on a small retracement lower because this week there’s probably going to still be a lot of volatility and we’ve opened a gap here between Friday’s high and today’s low. So it’s likely that this gap will be closed in the course of the week and we would just like to buy it just in that gap here.
So going long at 31,300 with a stop-loss at 30,500, just below Friday’s low, and an upside target of around 33,000, where the highs were made back in late May and early June.
So today’s Trade of the Week is to go long the Dow Jones Industrial Average at 31,300 with a stop-loss at 30,500 and an upside target at 33,000.