Dow Commentary

The Dow Jones Industrial Average managed to close above its 200 day moving average this week. The index formed a “W” pattern on the daily chart. This bode well for the bulls. However, this pattern was formed on low volume, meaning that the market went up without the mass participation that is required to make a sustainable rally. It is likely that the market is moving up because of the lack of sellers rather than abundance of buyers.

The improvement in the market action is also shown in the daily phase. The phase chart has moved back to “Warning” phase from “Distribution” phase. This improvement cannot be taken as sign to buy into the market and investors looking to add to their positions should wait for a better entry point.

EURUSD In Bearish Phase

EURUSD continues falling amid more news of problems in Europe. A Hungarian official's warning about the state of his country's economy deepened anxiety over Europe's debt crisis.

The currency pair has now broken below 1.20 levels and looks likely to fall further.

Looking at the phase chart, we see that the trend for EURUSD is firmly in “Bearish” territory. Apart from mid April where the currency bounced above its 50 day moving average, the currency pair has been in “Bear” phase since late January. Traders who had taken the signal to short the market would have seen the currency pair falls from 1.38 level to the current 1.19 level. That is a good profit for staying with the trend.