Technical forecast for US and Euro Stock markets

Dow Jones Industrial Average is having problems with 13958/62 resistance which has held 4 days in a row so clearly there are sellers at this level. A double top pattern offers a low risk shorting opportunity here with a tight stop above 14000. There is potential for a move back to 13878 then 13830 which should hold the downside for today. However a break of 13800 confirms the double top for a target of 13750, possibly 16374 in the days ahead.

A break above 14000 however means that the bulls are back in control and we should push on towards 14097 then 14205.

FTSE tested & held resistance at 6274 in the afternoon as predicted as the daily outlook begins to weaken. It could be worth trying shorts here again today with a stop above 6296 for 6307 then 6323 highs.

6225 is our first support level and this also exactly held the downside yesterday, but below here we could retest the week’s low at 6195. If this breaks 6179 is our first target but there is scope for a move as far as 6150/45. This however is very good support for today and so a bounce could be expected here. Any longs will need a stop below 6130 for a test of 6095. If we do not bounce from here then 6041/35 could be the next downside target.

Dax futures topped at 7699 resistance as expected. We then took a tumble towards support at 7528 where we suggested attempting longs we looked for a low for the day and possibly for the week. The low of the day was in fact 7536.

7600/12 is resistance but above we could stretch to 7658 which should hold but strong resistance above at 7695/99 again today and a high likely.

Excellent support at 7536/26 could hold the downside but a break targets a 9 month trend line and 100 day & 21 week moving averages at 7475/55 where we would expect a low for the day if seen.

EuroStoxx held resistance at 2661/65 as expected. We looked for a retested of the 200 week moving average & Monday’s low at 2610/05 and this did hold the slide. A break lower today is possible & targets 2589/83 which is much better support so here it should be wise to exit any shorts. We could see a low for the week so we can try longs with a stop below 2570 for 2550.

Resistance at 2636/40 with a push through here able to test 2658/61. We should top out here but look for resistance at 2679/82 above. If we continue higher 2696/99 should present a good selling opportunity.

S&P is having problems with 1510/11 resistance which has held 4 days in a row so clearly there are sellers at this level. A double top pattern offers a low risk shorting opportunity here with a tight stop above 1513 but below 1506 the downside potential is 1500/99 again today. This level held perfectly yesterday but looking out to the rest of the week if we break 1499, this topping pattern targets 1494 and then 1490/91. A break below here will then confirm a move to 1486/85 on the way to 1481/79 but the over all target for the correction will be 1470.

A break above 1513 however keeps the bull running to 1515 then on to 1521 and then 1527.

Jason Sen began his career in the options pits on the trading floor of LIFFE in 1987 at the age of 19, making markets on his own account. In 2001 when the trading floor closed he successfully made the transition to day trading on computer screens. Jason always had an interest in technical analysis throughout his trading career but began to study this area in depth from 2006. www.daytradeideas.com has established itself as the leading provider of... More