Dow Inverse Head And Shoulder

Stock market has rallied across the board. The Dow Industrial Average is now above 9000 level. The index is currently at Jan 2009 level.

Technically, the charts are looking better. Just a few weeks ago, there was a possibility of a sell-off based on the head and shoulder pattern. That did not materialize. And when the pattern failed, the market rallied. The reverse seems to be happening. An inverse head and shoulder is now in the picture.

The ADX chart is showing the development of an uptrend, with +DI above –DI and ADX moving towards 30 levels.

MACD is indicating a bullish trend as well with the indicator above its signal line.

RSI is now at overbought levels but it an uptrend situation, market can stay at overbought levels for longer periods.

Based on the monthly charts, the 50% Fibonacci retracement level is at 9176 and 61.8% retracement level is at 9825 level. Market needs to scale these 2 levels for up move to continue.

Let’s see if the market is able to stay above 9000 level next week.

Happy trading!

Dow Potential Head & Shoulder Pattern

Stock market around the world is in corrective phase except for the Shanghai market which went above the 3000 resistance level.

If you look at the technical charts from US, Hong Kong, Singapore etc, the charts are all showing a potential head and shoulder pattern.

For US Dow Industrial Average, the index needs to stay above 8200. If it breaks this level, the right shoulder will be completed and it suggests a target of 7523.

Let’s see if the US market is able to hold on to 8200 level next week.