Would selling the Dow Jones be beneficial for you?
Tradefair Weekly Update 
/ Simon Denham / 08 August 2008 / Leave a comment
Buzzword of the week; tip 7
You can trade US indices on the Tradefair Spreads platform.The most famous of these is the Dow Jones Industrial Average. It is often referred to just as "Wall Street", and that is what it is called on the platform.
Technical Tip of the week
After prices have moved in one direction for a while it is common for there to be a retracement. This can be for many reasons; some traders who have made money on the move start to take profits, other traders take a view that the move went too far and bet the other way. Analysts have come up with many techniques for anticipating the size of retracements. One popular technique, Fibonacci retracements, is based on a phenomenon found in nature called the Fibonacci series. The theory is that certain percentage retracements are more common statistically than others, in particular 23.6, 38.2, 50.0 and 62.8. Users look for retracements to end at horizontal support or resistance lines drawn at these levels. You can draw Fibonacci retracements easily on your charts on the Tradefair Spreads platform using an icon at the top of the chart.
Recent Wall Street down trend
In May and June of this year many traders made money selling Wall Street. On 19th May the index tried and failed to get above the previous high made on 2nd May, then on 21st May the index breached the low made on 9th May. This looked like the index had formed at least a temporary top. There were plenty of other spread betting opportunities to sell the index later, but the traders that sold on 21st May had a great trade see example:
21st May - 12700 sell Wall Street at £2 per point - RISK* £380
17th July - 11430 buy Wall Street at £2 per point - PROFIT £2,540
* STOP placed 1.5% away at 12890
Wall Street Fibonacci retracements
The downtrend in Wall Street, like the downtrend in many other indices around the world, has stalled recently. If you look at the chart click here you can see that a line drawn at the Fibonacci retracement level of 38.2% has contained the retracement so far. The next time price gets up to that level many traders will be watching closely to see if this barrier stays in tact.
To view an example of the Fibonacci retracements using the Tradefair Spreads platform click here.
Happy trading!
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