U.S. Indices Technical Highlights:
Dow Jones Industrial Average and Nasdaq 100 Technical Outlook for Days Ahead
The Dow Jones Industrial Average (DJIA) broke out of a short-term bull-flag a little over a week ago and along with it the consolidation pattern in place since early May. This has old-school stocks leading the broader market higher.
Of course there isn’t any resistance now that the DJIA is in record territory, so it will be a function of gravity playing its part on how high it could climb. Given the extended sideways movement in recent months, this could be a fairly extensive leg higher.
In the near-term, a dip from here will have the October trend-line in focus as support. It isn’t the cleanest form of trend support, but will nevertheless be viewed as a potential floor. It would take a sharp punch lower followed by an inability to turn around quickly, before considering that a correction (or worse) could be underway.
Dow Jones Daily Chart
The Nasdaq 100 has taken a bit of a backseat to the Dow recently, with growth stocks losing steam. But this period we are seeing where the NDX moves sideways may soon come to an end, and we will once again see a rotation from old school stocks back to new school.
A breakout in the index will have an upper parallel (~15575) in play that runs over from early September. The nearly one-year upper channel line could be a meaningful level of resistance, but we will need to closely watch price action to determine that should the NDX rise to that point.
To turn the outlook bearish, an undercutting of 14787, the lowest point of the consolidation, will be needed to flip the outlook bearish. This is seen as a low probability scenario at this time.
Nasdaq 100 Daily Chart
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—Written by Paul Robinson, Market Analyst
You can follow Paul on Twitter at @PaulRobinsonFX