Technical forecast for US and Euro Stock markets

Dow Jones Industrial Average Future is closing in on our target of 13932 topping just a fraction below at 13919. We are drastically over bought so we warned of profit taking at this level and as predicted we took a tumble back to support at 13863/859.

Yesterday’s new high with a lower close near the lows of the day could be the sell signal we have been watching for after the month long rally. 13776/756 looks a likely target today but also a possible low for the day. However a break below here could trigger sell stops and see us trade down to 13655/640. Here we meet excellent daily support so little chance of us falling any further and a good chance of a bounce. If we do break however look for 13575 next.

FTSE future hit our target of 6306 and over ran to 6315 before topping out. We have been watching for a sell signal with the market so overbought and yesterday’s new high followed by a lower close could be that signal.

We did manage to hold our first support at 6270 which in fact marked the exact low yesterday. However we are trading just below here today looking for 6250 next and this may hold the downside this morning. However a break below 6230 should then lead us down to 6210/08. This should mark the low for today if tested so worth exiting all shorts and buying in to longs with a stop below 6190 for 6175. Failure here then targets 6145 and this level should support for the week if we fall this far.

Resistance now at 6275 but above here we could try for a retest of the 6306/6315 highs. A break above here is very unlikely now with yesterday’s reversal but would take us back into mid 2008 territory with targets of 6359 and then 6396 which was a high in May 2008. We start to hit some very heavy congestion here.

Dax futures failed below last week’s high at 7888 and broke support at 7802 to hit the next target at 7776 and bottomed exactly here.

The bounce took us back above 7802 but with US markets weaker over night we may be testing 7776 again this morning. Below here 7749 could hold initially were we meet the 21 day moving average but a break lower targets 7712. Failure here could offer a very good buying opportunity at 7666.

Above 7802 we hit resistance at 7835 which should be a struggle today. Watch for a high but if we break look for 7859/69. A break through the highs of 7888 should finally hit our target just above at 7896/7906 which should hold the top.

Eurostoxx tested and held 2755/56 resistance which has held us back all week. Some end of month profit taking then took us back to test short term Fibonacci and 9 day moving average support at 2724. We did not expect the market any lower and in fact this was the exact bottom.

So the range for today is 2756/55 down to 2724. There is further support at 2719/18 which may hold the low today. A break however see 2709, possibly 2697/96. This level should see prices bottom out if we fall this far.

A break above 2755/56 would allow a move to 2766/68 and if we continue on look for 2783 then 2799 this week.

S&P is drastically overbought so we were watching for a sell signal. We finally hit our longer term target of 1503 and over ran to 1506 but failed to reach the next target of 1510/11. We then closed lower and near the low of the day. This may be the sell signal we have been waiting for.

We are now testing the 9 day moving average at 1493 so a small bounce from here is possible but it is unlikely we make it back to 1503/06 resistance, perhaps 1500 is all we will see. Support at 1491/90 could be tested at some stage and a break below here should trouble bulls and trigger sell stops. 1486/85 should then be seen but there is scope for 1481/80. This is good support and is unlikely to be broken on the first attempt so we look for a bounce from here if tested today. However longs need a stop below 1475 for 1472 then 1466. This is excellent weekly support and we are likely to see a low here at this stage.

EURUSD burst through major long term resistance at 1.3479/91 and the 200 week moving average at 1.3529 which was completely unexpected. The close above this level now opens the door to 1.3609/14 then 1.3653 and possibly 1.3690 above is achievable this week.

We are of course very over bought but this is being ignored. Any drift lower finds support at 1.3516 but below here we may see 1.3471 with strong support at 1.3448/435 likely to provide a floor if we fall this far.