23/06/2010 – DJIA’s 200-Day Moving Average: Will the Dow stay above or below

Moving averages are one of the most widely followed indicator
in technical analysis.
Simply put, when the price of an index or stock stays above a particular
price moving average line on a chart, that price level serves as support —
a level where buyers reside.
If the price falls below a moving average line and “can’t” break
through from the underside, this price level is a line of resistance —
a price level where sellers hover.
That’s an easy explanation of moving averages for you.

Learn
to integrate Elliott wave analysis with other technical disciplines. Read
the FREE Ultimate Technical Analysis eBook to discover some of
the favorite technical analysis methods used by the analysts
at Elliott Wave International. Learn
more and download your free, 50-page technical analysis ebook
here.

A commonly watched line is the 200-day moving average.

After the DJIA fell below its 200-day moving average in May,
prices remained mainly below the line until June 15, when the
market rose 213 points. But, as this chart from Elliott Wave
International’s June 16 Short Term Update shows, the
NYSE volume has remained muted:

“There was no follow-through today. More stocks closed
down than up on the day on the NYSE, within the S&P 500
and also for the DJ Composite. Today’s Big Board volume was
similarly slow relative to yesterday. …” — Steven
Hochberg, Short
Term Update, June 16, 2010

With a lack of buying conviction, how long will the stock indexes
remain above the 200-day moving average?

For the answer, you need to look at the DJIA’s Elliott wave
structure. It strongly suggests the market will move in a definite
direction in a matter of days or weeks.

This
article, DJIA’s 200-Day Moving Average,was syndicated by Elliott Wave International. EWI
is the world’s largest market forecasting firm. Its staff
of full-time analysts lead by Chartered Market Technician Robert
Prechter provides 24-hour-a-day market analysis to institutional
and private investors around the world.

Trade Forex, Commodities, Stocks and more, trade CFDs on the Plus 500 CFD trading platform! *CFD Service. 80.6% lose money - Register a real money account here and get trading right away.

Disclaimer: Please note all prices are for information only, they should not be relied upon for accuracy or trading. All prices quotes are based on CFD prices and are similar though not always identical to real exchange prices. STOCKTRKR or anybody connected with STOCKTRKR will not accept any liability for loss or damage arising from use of any information/commentary/charts or articles which is provided 'as is' for educational purposes only, nothing contained on this website should be considered as investment advice - please seek proper investment advice from registered financial broker or institution if you wish to trade on global markets and ensure you are familiar with the risks.