Follow up on Dow Jones behavior and comparison with Nikkei and Hang Seng

I have mentioned Dow Jones Industrial Index ( DJIA ) in my entry Are we in a bear market already? yesterday. while doing so, I have noticed the latest up-date of Dow, it reminded me that I  have expressed uncertainty on Dow in Dow Jones, Hang Seng & Nikkei Up-dates - 13/8/2022 and I thought I need to follow up on Dow Jones direction before I move on.

Fig 1. Dow Jones Weekly Chart & Comparison With Nikkei 225 And Hang Seng

For the chart in Fig 1, I have included Nikkei 225 and Hang Seng index. I have found that it might be a good idea to put 3 charts into 1 as we can see how each counter perform compare with others.

First, let's talk about Dow Jones. Dow Jones just broke the 55-week moving average upward last week. It is possible that the penetration is weak and there is a possibility to retrace 100% with continuation downward.

It did not happen, instead the formation of a shorting star. However, I believe the shorting star does not signify a reversal but a correction. I am likely to see Dow Jones heading down in coming week and may congest the next 2 or 3 weeks before continue up-ward. 

Reasons for my deduction are as follows:

1. It is supported by 8, 21 and 55-week moving averages at this point of time;
2. 8-week moving average just crossed 21-week moving average with a golden cross, meaning a possible short term uptrend;
3. The size of shooting star is small and less significant as a sign of reversal;
4. The climb of Dow is steep, there are momentum heading up;
5. It crossed the previous high (  minor wave );

The next significant level to me the peak at 36,952 and 35,410, which the Bollinger envelop presently lies.

With putting the 3 indices together, we can see when they start to disconnect with DJIA and each other.

Beginning of 2018 for instance is where we see the beginning of  Hang Seng's decline. While Nikkei and DJIA entered a correction phase, Hang Seng tumbled. In fact, Hang Seng seemed to used a 3-year spread to form a double top with failure swing and began to plunge by 2020. It was saved by the Covid-19 lock down, stopping at the neckline, other wise I believe the depreciation would have been worse.

However it is not helping Hang Seng, because by beginning of 2021, it began to disconnect with Dow Jones and on its descend again. It has crossed the previous low which now become the new neckline of a much larger double top. At this point my article The HSI monthly chart applies.

While Nikkei traces the progress of Dow Jones between 2017 to 2020,it failed to reach new height and plunge by 2020on double top completion, again it was saved by the Covid-19 lockdown.

It is interesting to note that like Hang Seng, Nikkei also disconnect from Dow in 2021, but unlike Hang Seng, it corrected and by beginning of 2022 it reversed and continued its upward climb. It is also interesting to note that it is also in the beginning of 2021 that Nikkei overtake Hang Seng.

Base on the present set up, we can use projection to measure the next level of resistance, which is between 33,603 to 39,118.