US DOW: More Upside if breakout above 8,600 points

The US market has been moving sideways with a tight trading range last month after breaking the resistance levels of 8,170 and 8,300 points. The DJI closed at 8500.33 points end May after trading between 8,250 and 8,580 points. The DJI has increased about 30% from the March low. Market is a little uncertain because key economic indicators such unemployment rate continues to rise and the mortgage crisis that has now moved toward prime mortgages creates a little fear in investors on whether the economy is really improving. The market was earlier boosted by better than expected monthly corporate earnings.

The DJI has retraced about 28 percent from the longer term down trend since October 2007. The next significant retracement level is the 38.2 percent Fibonacci level which is at 9,420 points. With a strong bullish momentum and sentiment there is a high possibility of the DJI climbing to this level because most markets have retraced near this level. A break above the current resistance level in this trading range at 8,600 points would boost this possibility. However, expect more downside move if the support level of this trading range at 8,250 points is broken. The next support level is at 7,900 points.

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Article contributed by Private Trader, Market Expert, Trading Coach and Chief Market Strategist of Nextview, Mr. Benny Lee. For more articles and commentaries from Benny, click HERE.