EQUITIES 3 minutes to read

Top and reversal patterns in US stock Indices

Kim Cramer Larsson

Technical Analyst, Saxo Bank Group

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. 
Source: Saxo Bank
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.
Source: Saxo Bank

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