Megaphone 20-Year Support Holding, Dow Experiences Historic Rally
Dow Megaphone Pattern 20-Year Support Chart
Should investors be surprised by the strong rally over the past couple of weeks? Not if one is aware of this giant megaphone pattern, that was first highlighted on 11/24/17.
This chart looks at the Dow Jones Industrials on a monthly basis, reflecting it has remained inside of the 70-year rising channel (1).
It hit the top of the channel at the start of this year at (3), creating a large bearish monthly reversal pattern, prior to the virus being front-page news.
The decline in the first quarter has the Dow testing 20-year rising support at (4), where it created a large bullish reversal pattern.
Even though the Dow has experienced a historic decline in the first quarter, it did not break 20-year support at (4).
If the bears are going to be correct and the sky is going to fall, support at (4) will first have to be taken out. If it does the next key support level happens to be the 2007 highs in the Dow.
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