However, 23,500 is near to a minor support level. That is a small consolidation band between 23,200 and 23,600. But it is a very weak consolidation support area, so there is a high probability the market will plunge below that level before rebounding.
A fall below 23,500 finds the next strong historical support level near 22,500, which is the value of the long-term uptrend line. This line starts in 2011, so its placement and value is approximate.
Investors will look for the Dow to pause and consolidate in that area before entering again for a continuation of the long-term uptrend.
Traders remain short, but tighten stops as each of those support levels is tested.
Daryl Guppy is a trader and author of Trend Trading, The 36 Strategies of the Chinese for Financial Traders, which can be found at www.guppytraders.com. He is a regular guest on CNBC Asia Squawk Box. He is a speaker at trading conferences in China, Asia, Australia and Europe. He is a special consultant to AxiCorp.
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