Technical Outlook - US Equity Indices

After Wednesday’s disappointing retail sales snapped concerns for Fed’s near-term interest rate hike, negative PPI, on Thursday, fuelled speculations that the Federal Reserve won’t be practicing their first interest rate increase since 2006 sooner, supporting the equity markets to continue enjoying the easy money. On Thursday, the S&P 500 [SP500] closed at record high while the Dow Jones Industrial Average Index [DJI30] is currently trading near the record level and the NASDAQ [NQ100] is at a month’s high.

Given the backdrop, the following is a brief technical overview of leading US equity indices, namely, Dow Jones Industrial Average Index [DJI30], S&P 500 [SP500] and NASDAQ [NQ100].

Dow Jones Industrial Average Index [DJI30]

Even if the eight month old ascending trend-channel continue supporting the index up-move, 61.8% FE of its October – December 2014 up-move, near 18400, followed by the channel resistance, currently at 18500, could restrict near-term advance by the DJI30. Should the index surpasses 18500 on a closing basis, it could rally towards testing 19000 psychological magnet followed by the 100% FE of the said move, near 19200. On the downside, 18100 multiple support region, quickly followed by the 18000 psychological mark, could pullback the recent up-move by the index, breaking which 17900-17800-17700 are likely consecutive supports before the index tests the 17520-50 important support region, including 200-day SMA and the channel support. An extended decline below 17500 is likely providing considerable damage to the index by signaling 17000 horizontal support on the downside.

S&P 500 [SP500]

Ability to break the 2110-20 horizontal mark fueled the S&P 500 towards trading near the record high, signaling to test 61.8% FE of its October – December 2014 up-move, near 2150, breaking which the index is likely to advance towards 2200 mark before targeting 2500 psychological level. Given the inability to sustain the record price, the index could witness 2100 as an immediate support level before it could test ascending trend-line support, also including 100-day SMA, near 2070. On the sustained break of 2070, the index becomes vulnerable to plunge towards testing 1970 horizontal mark with 2020 being intermediate support. Moreover, a trade below 1970 could force the index to test 1925-30 multiple support region.

NASDAQ [NQ100]

With the reversal from 4370 region, the NQ100 forms a Rising-Wedge, bearish technical pattern, on its daily chart; however, the current up-move favors the index to re-test 61.8% FE, near 4540, before it could register any declines. Should the index fails to reverse from 4540, resistance line of the formation, 4595-4600 region, could restrict medium-term advance of the index. However, a sustained break of 4600 mark negates the bearish formation and could fuel the index towards 4800 region. On the downside, 4420 and the support line of the formation, near 4390, quickly followed by the 100-day SMA, near 4340, are likely immediate supports for the index. Excessive decline below 4340 could make the index vulnerable to test 4290 and 4200 psychological mark in a quick downturn.

Follow me on twitter to discuss latest markets events @Fx_Anil

 

Anil Panchal
Market Analyst
Admiral Markets

At any use of the analytical material taken from the site of company Admiral Markets, and the secondary publication on any other resources, the rights to intellectual property for a dealing center «Admiral Markets», the reference to the company site is obligatory.

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