Dow Jones Industrial Average Bumps Up Against 70-Year Resistance

Share This Article
February 23, 2018 6:20am INDEXDJX:.DJI NYSE:DIA

From Chris Kimble: Back in November, I shared a long-term historical chart of the Dow Jones Industrial Average and pointed out a megaphone pattern breakout that looked bullish for stocks.

After that post, the Dow Industrials rose over 3000 points heading into January before embarking on a long overdue correction.

So what now?  Let’s take a look at an updated chart (see below)…

The Dow has spent the majority of the past 70 years inside parallel channels (points A, B, and C). And as you can see below, the Dow’s latest breakout above a megaphone pattern (point 3) has lead to a test of the upper channel (point 4). This is acting as resistance right now.

Look familiar?  It should.  This same pattern took shape during the last megaphone breakout (point 1).  That breakout lead to a test of the overhead parallel channel (point 2) in 1987.  That channel acted as (rising) price resistance until 1995, when it broke out once more and went on to test the upper channel boundary.

If this is any indication, it’s understandable why stocks are stumbling a bit here (at first pass). BUT, if they follow the same pattern, they may continue to test this rising channel resistance:


The SPDR Dow Jones Industrial Average ETF (DIA) rose $1.81 (+0.73%) in premarket trading Friday. Year-to-date, DIA has gained 0.85%, versus a 1.33% rise in the benchmark S&P 500 index during the same period.

DIA currently has an ETF Daily News SMART Grade of A (Strong Buy), and is ranked #1 of 79 ETFs in the Large Cap Value ETFs category.

This article is brought to you courtesy of Kimble Charting Solutions.

Read Next

Get Free Updates

Join over 50,000 investors who get the latest news from!

Most Popular

From Our Partners

Explore More from

Free Daily Newsletter

Get daily ETF insights from our market experts. Never miss another important market development again! respects your privacy.

Best ETFs

We've rated and ranked nearly 2,000 ETFs and ETNs using our proprietary SMART Grade system.

View Top Rated ETFs

Best Categories

We've ranked dozens of ETF categories based on relative performance.

Best ETF Categories