Jump to content

Dow Jones, S&P 500, Nasdaq 100 Charts Near Big Support, Pattern Test


Recommended Posts

U.S. INDICES TECHNICAL OUTLOOK:

  • S&P 500 trading towards neck-line of H&S pattern
  • Nasdaq 100 on verge of testing H&S neckline
  • Dow Jones trading around big level from last spring
S&P 500 Charts Are So Bad Even Bulls Are Looking to Adjust Bets

DOW JONES, S&P 500, NASDAQ 100 CHARTS NEAR BIG SUPPORT, PATTERN TEST

The S&P 500 rolling over in recent trade has it moving towards the neckline of a head-and-shoulders pattern dating to early September. The pattern, if triggered, could set off a much larger decline in the weeks ahead.

But before we get ahead of ourselves the neckline is support – and support is support until it’s not. These patterns have looked promising before only to never officially trigger the neckline. With that said, we will be paying close attention to how things play out here soon.

A slight breach of the Jan 24 low will have the neckline in full play. If it is to break a small bounce may ensue first, or we could see a slice through the key support level with little hesitation. It will take a large rally that sustains to bring to light the idea that the H&S pattern may fail.

If a clean breakdown does develop the size of the pattern implies we could see a measured move down to around 3600. This would have the SPX 25% off its record highs. The measured move target is determined by subtracting the distance from the head to the neckline from the point where the neckline is broken.

S&P 500 DAILY CHART

S&P 500 daily chart

S&P 500 Chart by TradingView

The Nasdaq 100 head-and-shoulders looks very similar to the S&P 500’s. The NDX is currently testing the low from January, and on a break will have the neckline squarely in play. The measured move target for the NDX is down to around 11k. That would mean the NDX lost ~34% off the 2021 high.

But again, before we put the cart before the horse, the neckline needs to break first. The same outlook holds for the NDX as it does with the SPX when it comes to the neckline. It’s support until it isn’t.

NASDAQ 100 DAILY CHART

Nasdaq 100 daily chart

Nasdaq 100 Chart by TradingView

The Dow Jones is testing a key level right now that runs back to the spring of last year. Right around 33k holds the key for what has developed into a broadening top. These patterns marked by higher highs and flat bottoms indicate a market that is growing increasingly tired with each rally as the sell-offs get a little larger each time.

If we see support break this will officially trigger the pattern and should set off a large decline. This would be consistent with what we are seeing in the broader market and NDX. We may first see a bounce off support before selling off, but it looks increasingly like we will ultimately see lower levels.

The Dow has held up better than the SPX and NDX, but as noted not long ago that will change if we go into full-on bear mode. It is likely not to matter whether it is growth or value, nearly all stocks will get sold during a strong risk-off event.

DOW JONES DAILY CHART

Dow Jones daily chart

Dow Jones Chart by TradingView

Resources for Forex Traders

Whether you are a new or experienced trader, we have several resources available to help you; indicator for tracking trader sentiment, quarterly trading forecasts, analytical and educational webinars held daily, trading guides to help you improve trading performance, and one specifically for those who are new to forex.

---Written by Paul Robinson, Market Analyst. 23rd Feb 2022 DailyFX

Link to comment

Create an account or sign in to comment

You need to be a member in order to leave a comment

Create an account

Sign up for a new account in our community. It's easy!

Register a new account

Sign in

Already have an account? Sign in here.

Sign In Now
  • General Statistics

    • Total Topics
      23,597
    • Total Posts
      96,957
    • Total Members
      44,163
    • Most Online
      7,522
      10/06/21 10:53

    Newest Member
    shibui
    Joined 01/12/23 19:56
  • Posts

    • It is a best practice to buy dip and sell high but this strategy mostly doesn’t go as planned because you can’t predict the final bottom. Some traders BTD anticipating a potential pullback which mostly doesn’t happen and this force some into panic selling. DYOR is mostly advisable but some people fail to know which analysis they should focus more on. When deciding to hold a token for a long-term FA is very important and its cardinal point should be thoroughly scrutinized before making such a decision. These points include; Whitepaper, Road map, and Usecase. These points have a huge impact on deciding how long to hold a project and also booast your confidence in the project's bullish potential.  The first principle in this industry is “invest what you can afford to lose" though many neglect this principle as such when a project is going through a price correction they panic sell and sell at a huge lost. Most normal regret their decision later when they see the project back on track. Once you adhere to the first principle you hardly fall victim to panic sales. Note that it is mostly not advisable to hold meme tokens una less you are convinced because meme goes with the hype and finds it hard to retest its ATH once the hype is over.  Anyway what are your trading strategy and principles you adhere to most?
    • The market is really trying to break boundaries this December & would love to see that happen cos this month has never been this rosy from past records. On the issue of binance with SEC, I think with time everything will  be fine & I'm thinking of leveraging on the present market conditions on BG's earn products.
    • Yeah, I believe Bitget and Binance made the wisest decision to partner with such talent and help the whole industry reap from their influence in increasing crypto adoption. 
×
×
  • Create New...
us