TradeCompass for Dow Jones Futures – January 22, 2025
At the time of this analysis, Dow Jones Futures (YM) are trading at 44,239, which places the market below the key bearish threshold of 44,243. This supports a bearish outlook for the day. Below is a detailed Dow Jones Futures analysis and price prediction outlining key levels and targets for both bearish and bullish scenarios:
Bearish Price Prediction for Dow Jones Futures
If Dow Jones Futures remain below 44,243, bearish momentum is likely to continue. Here are the profit targets for sellers:
- 44,228 – A quick initial target, located just above today’s VWAP and the first lower standard deviation.
- 44,200 – A psychological level, often attracting significant trading activity.
- 44,178 – Corresponds to the first upper standard deviation of yesterday’s VWAP.
- 44,139 – Positioned just above yesterday’s POC (Point of Control), a critical liquidity level.
- 44,017 – Slightly below yesterday’s VWAP, suggesting extended bearish momentum.
- 43,918 – Above the value area low (VAL) of yesterday, where buyers might attempt to counter.
Bullish Price Prediction for Dow Jones Futures
Should the market recover and sustain above 44,293, a bullish scenario may unfold. Here are the key profit targets for buyers:
- 44,337 – Represents higher momentum and liquidity levels, signaling strength in buying.
- 44,497 – An extended bullish target, indicating strong continuation potential.
Key Insights for Dow Jones Futures Traders
- VWAP and Standard Deviations: Monitor price reactions around the VWAP and its standard deviations, as these dynamic levels are crucial for identifying intraday trends in Dow Jones price movements.
- Volume Analysis: Assess cumulative delta and volume progression to gauge buyer/seller strength near critical levels like POC, VAH, and VAL.
- Psychological Levels: Round numbers like 44,200 and 44,500 often act as magnets for price action, influencing market behavior.
- Risk Management: Implement tight stop-loss levels and utilize partial profit-taking strategies at the outlined targets to optimize your risk-to-reward ratio.
Dow Jones Futures Price Prediction Summary
- Bearish Bias Below 44,243: Targets include 44,228, 44,200, 44,178, 44,139, 44,017, and 43,918.
- Bullish Bias Above 44,293: Targets include 44,337, and 44,497.
This Dow Jones Futures analysis provides a comprehensive roadmap for navigating today’s price action. Stay attentive to how the price interacts with these levels and adjust your trades accordingly.
Trade at your own risk. Remain flexible and adapt to the evolving market conditions for Dow Jones Futures (YM).
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Trade Compass Follow-Up: Dow Jones Futures Update
At the time of this follow-up, Dow Jones Futures is trading at $44,381, following an eventful session where both the bearish and bullish thresholds outlined in the TradeCompass for today were tested.
Initial Trade: Short Position
The day started with a short trade below the bearish threshold of $44,239, which was triggered as the market dipped briefly. However, this move quickly reversed, stopping out the trade.
The TradeCompass does not dictate a specific stop-loss placement, as this depends on individual risk tolerance and strategy. That said, logical considerations can guide stop placement:
- Yesterday’s Value Area High (VAH): At $44,275, this level can serve as a reasonable stop location to limit risk.
- Bullish Threshold: At $44,293, the red line of the Compass indicates a reversal to bullish sentiment. A stop placed above this level (e.g., $44,281) ensures alignment with the strategy.
Ultimately, the market sustained above $44,293, confirming a bullish breakout and invalidating the bearish case.
Current Trade: Long Position
After sustaining above the bullish threshold of $44,293, a long trade was triggered. The market rallied to hit the first profit target at $44,337, marking a successful phase of the plan.
Upon reaching the first target, the stop-loss was adjusted to the entry price of $44,293, securing the position against a potential reversal. The second profit target is open at $44,497, and the trade remains active.
Key Rules and Takeaways
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Trade Limit Per Direction:As per the TradeCompass, only one trade is allowed per direction per day for each instrument.
- One short trade was attempted (stopped out).
- One long trade is now active (targeting the second profit level).No further trades will be taken in Dow Jones Futures today.
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Risk Management:Logical stop-loss placement is critical:
- The stop-loss for the short trade should have considered $44,275 or $44,281 as thresholds.
- For the long trade, the stop has now been moved to the entry price of $44,293, ensuring risk-free potential for further gains.
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Avoid Overtrading:By limiting trades to one per direction per day, the plan avoids unnecessary losses in choppy markets. This disciplined approach ensures adherence to the strategy and minimizes emotional decision-making.
Current status of the TradeCompass plan today for Dow Jones
- Current Trade: Long position targeting $44,497.
- Next Steps: If stopped out at the entry point, no additional trades will be taken in Dow Jones Futures today. Traders can consider other instruments analyzed by the Compass.
The TradeCompass provides a structured, logic-driven plan to navigate the market, emphasizing patience, discipline, and strategic execution. Stick to the plan, protect your capital, and trade with confidence.
This article was written by Itai Levitan at www.forexlive.com.
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