I was watching the on the 3 US market indices hitting stubborn resistance last week and I was very cautious that market can turn downward anytime. Indeed, uncle Dow Jones took a big diving and formed a dark big candle. Nasdaq was hitting 200d MA and discontinued its earlier rally. It is now back to the same level before the rally.
It was a bleeding week last 5 days. Where do you think the market will go in the coming week?
We were watching the resistance last week and we should look at the support in the coming week. The market took a big dive last week and it is now trading very near to the support level. If you did short last week, it is about time you should take you profit this week. If you are looking to long, this might be an opportunity if the market rebounds on the support, breaking the support would suggest breaking low to form a new low, which is an opportunity to short to add your shorting position.
Let’s take a quick look on Dow Jones & Nasdaq now. I do not include S&P500 this week because the chart look very similar to Dow Jones, instead, I choose to analyse the Dow Jones & Nasdaq using both daily and weekly charts.
Dow Jones Broke Daily Trendline
Dow Jones broke the daily trendline last week with a big long dark candle. That’s a bad sign. Once again, it disqualified the formation of possible bullish ascending triangle. In just 2 days, it is now trading very near to the support level at 11,000.
Looking at the daily chart, Dow Jones do not have strength to penetrate upward the 50d MA resistance, it retraced back after hitting the 20d or 50d MA as well, which is still showing a possible down trending market.
Looking at the daily chart, it shows a possible sideway movement between support 11,000 and resistance 11,700. While I am looking for some confirmation signal, I choose to look at the weekly chart as well.
Let’s take a look at it!
Dow Jones Stock Market Trends Sep 6, 2008
Dow Jones Weekly Chart Hitting 200w MA
Looking at the Dow Jones weekly chart, immediate observation is the down trending market is still intact. In addition, Dow Jones is now resisted by the 200w MA and therefore, there is a possibility of breaking the low and form a new lower low to continue the down trending market.
I would not over analyse the indicators in this case but looking at the price action, the market is facing downward pressure with a dark candle body.
Daily chart suggests sideway movement and weekly chart suggests down trending market. The best bet would be short at the resistance 11,700, however, we missed the opportunity if we did not short 3 days ago.
Now, we shall look at the support at 11,000, breaking such support would suggest a possible formation of new low and we can short at that level.
Let’s take a look at Part 2 – Nasdaq stock market trends too.
Dow Jones Weekly Chart Stock Market Trends Sep 6, 2008
DISCLAIMER: This information is used for learning purposes only. It does not constitute an offer or solicitation to buy or sell. You should do your own analysis on top of my postings.
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