Dow Jones — false breakout starts the selloff after jobless claims

30 Apr 2020 recap — yesterday Dow had an increase of supply together with bearish price action, with the close above the support level 24270, reacting the initial jobless claims data, which was higher than economist expectations.

A break below the swing high suggests a false breakout, which is bearish and should attract short sellers to short the market. The false breakout is under the context of fading of momentum in Dow Jones. Check out the video below on using trend channel to judge the price action momentum.

The Dow Jones futures during the London session today has broken the support level of 24270 and currently testing 23880 level. A break below swing high at 24270 presents a false breakout scenario.

If the support level at 23880 was broken, we should see a correction to 22950. The next important support level is at 22500 if 22950 was not defended.

Below are the potential long setup for Dow Jones index (DJI) for trading session on 1 May 2020, with a potential reward to risk ratio of 2.3.

Entry: short limit order at 23900

Stop loss: 24300