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Top and reversal patterns in US stock Indices
Kim Cramer Larsson
Technical Analyst, Saxo Bank
Summary: Saxo Bank's Kim Cramer Larsson takes a look at the charts and explains why the Dow looks ripe for correction and why the Nasdaq is flagging imbalance.
The Dow Jones Industrial Average Index has formed a Doji Evening formation. Coupled with RSI divergence and volume not having risen during the uptrend, the index is ripe for a correction. A correction that could take the Index down to its 55-day simple moving average ie. around 25,700 but potentially down to the 200-day average around 25,000.
For this reversal scenario to be busted, a close above the Doji ie. 26,488 is needed.
For this reversal scenario to be busted, a close above the Doji ie. 26,488 is needed.
Nasdaq 100
As mentioned during the morning call this morning the Nasdaq 100 has formed what looks like a rising wedge pattern.
Markets have indeed been in a happy mood for most of 2019 but maybe things are starting to fade a bit.
The Nasdaq 100 is now indicating RSI divergence ie. RSI is falling as the market has been rising, which is an indication of imbalance. The imbalance is also underlined by the fact that volume has been falling during the uptrend since the New Year.
As mentioned during the morning call this morning the Nasdaq 100 has formed what looks like a rising wedge pattern.
Markets have indeed been in a happy mood for most of 2019 but maybe things are starting to fade a bit.
The Nasdaq 100 is now indicating RSI divergence ie. RSI is falling as the market has been rising, which is an indication of imbalance. The imbalance is also underlined by the fact that volume has been falling during the uptrend since the New Year.