US DJI - A little more room to move upwards

The uncertainty in the US economy because of fear of rising inflation resulted from increasing commodity price especially the crude oil has taken its toll on the US stock market. The heavily benchmarked US DJI has affected the performance of other markets around the world. After finding a strong support level at 11,700 points level, the DJI climb strongly upwards since March this year but found a strong resistance at 13,100 points level. A bearish reversal pattern (indicating toppish market) called a double top was formed at this resistance level and it was confirmed and the DJI is now at 12,307.35 points.

A strong upward rebound in the past two days may send a positive note to markets worldwide but the down trend resistance level is at 12,400 points, leaving it a little more room to move upwards. The DJI is not expected to break above this resistance because the momentum indicators like the RSI and MACD are indicating a strong bearish momentum has started to develop and may send the DJI to its main support level at 11,700 points in the longer term.

Article by Benny Lee