DOW JONES INDUSTRIAL AVERAGE

New year started with  strong equity market performance especially for the U.S. indices. Gap openings in most of the indices were followed by consolidations. Gaps were filled in the past one week and the indices tested their support levels. It is clear from the charts that last one week’s contracting ranges accumulated some energy that will be released in the next few days. I’m not sure how long would the sideways movement continue but it will be explosive in the direction of the breakout. On the Dow Jones Industrial Average we might be forming a flag or pennant formation that could be followed by an upside breakout. This needs to be confirmed by market action.

Hourly chart of the Dow Jones Industrial Average shows the consolidation in detail. We should expect a breakout!