Technical forecast for US and Euro Stock markets

Dax1

EuroStoxx broke 2661 but failed below 2671. Daily charts are more positive but short term we are overbought so looking for buying opportunities if we drift lower in to the end of the week. A move back below 2650 sees 2642 on the way to better support at 2628/26 & this could hold the downside. However below here we test the week’ low at 2612/10. If we hold here then the bullish reversal pattern is still intact & we should head higher in to next week. A move below 2597 however risks a retest of 2589/83 lows. This remains good support a second chance to buy in to medium term longs in the hope of a double bottom, with a stop below 2564.

2671 is resistance but above here we look for 2690. Sell in to shorts here as we look for a high for the week, with a stop above 2700.

Dax futures broke higher hitting 7734 which we suggested was a good target to exit remaining longs & try shorts looking for a top in the early part of the week. We topped at 7739 so this trade is working nicely with short term indicators flashing overbought. A drift lower today tests support at 7696/91 but below here look for 7661/58. With the daily outlook more positive this may be as far as we fall so worth covering remaining shorts here. If we do continue lower look for 7638 then we aim to buy in to longs down to 7614/11.

7734/39 should offer another selling opportunity if tested but we need stops above 7760 for 7780/87 next target & resistance.

FTSE powered through 6304 to hit the 6359 target & topped here at 6362. Getting a little over bought in the short term so watch for profit taking. This would see us drift back to 6318 & below here good support at 6290/85 should hold the downside but be ready to stop out on any longs below 6270 for a buying opportunity at 6246/40.
Resistance at yesterday’s high of 6359/62 could hold again but any shorts here need a stop above 6370 for a 6396 target. Exit longs here and try shorts with a stop above 6405. Above here there is little to stop a run to 6500/05.

S&P finally hit our target of 1521 for the week and topped at 1522. We then held good support at 1512 on the pullback and are heading back towards 1521. The market is so overbought in all time frames now that it would be a surprise to see a break above 1521/22. We look for failure as we approach this resistance and for prices to drift lower again today to support at 1514, possibly as far as 1510/09. Good support and a buying opportunity at 1504/02 if we fall this far before the end of the week.

If we do find the strength to push through 1523 we should reach for the next target of 1527. These are the highs of Dec 2007 would you believe in what is becoming a dangerously over bought market.

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