Following a two days of weakness and early weakness on Thursday, US equity indices witnessed steep rally, ending the day with solid gains. On Friday, however, futures of all the three major US equity indices, namely - Dow Jones Industrial Average, S&P 500 and Nasdaq 100, are pointing towards a softer start ahead of the US Advance GDP figure, scheduled for release on Friday.
Given the backdrop, here is a technical update for three major US equity indices and where they could be headed in the near-future.
Dow Jones [DJI30]
On Thursday, the index managed to hold and rebound sharply from a short-term ascending trend-line support near 17,130 level to move back above 100-day SMA. On Friday, however, the index future is hovering around 100-day SMA and seems to be headed for its fourth weekly decline in last five. From current levels, should the index continue holding above 100-day SMA and manage to clear 17,500 mark resistance, it seems to extend the strength towards 50-day SMA resistance, currently near 17,700 mark, which is closely followed by a short-term descending trend-line resistance near 17,750 area. Further, a decisive move above 17,750 mark now seems to provide the required momentum to lift the index, beyond 17,950-18,000 resistance area, towards 18,500 resistance area, marked by the upper trend-line resistance of a long-term ascending trend-channel formation on weekly chart. Alternatively, should the index fail to hold 100-day SMA support, it is likely to drift back towards 17,250-30 intermediate support before heading towards the very important short-term trend-line support near 17,150-30 area. It should, however, be noted that a break below the trend-line support is closely followed by a very important support near 17,000 round figure mark, coinciding with 200-day SMA. Only a decisive break and close below 17,000 mark might trigger a short-term corrective move for the index towards the lower trend-line support of the ascending channel formation on weekly chart, currently near 16,500 level.
S&P 500 [SP500]
Of late the index too has been oscillating between 50-day and 200-day SMA, with 100-day SMA, near 2010 area, acting as Pivot-Point, exactly where the future is currently trading. Should the index drop back below 100-day SMA, it is likely to find support near 2000 psychological mark, which is closely followed by support near 1990 level, marked by 38.2% Fib. retracement level of Oct.-Dec. 2014 up-swing and also coinciding with Thursday's low. Meanwhile, a decisive break and close below 2000 mark is likely to seems to further drag the index back towards its very important support near 1975-65 zone, marked by 200-day SMA. Moreover, a decisive break below 1975-65 important support is likely to accelerate the downfall towards its next major support near 1925-20 area, representing 61.8% Fib. retracement level. On the upside, 23.6% Fib. retracement level near 2025-30 zone seems to act as immediate resistance. This is followed by a strong resistance near 2050-60 area, comprising of 50-day SMA and a short-term descending trend-line. A decisive move above this strong resistance area seems to open room for continuing the up-trend immediate towards 2014 closing high resistance near 2080-90 zone before continuing its upward trajectory towards 2130-35 resistance zone.
Nasdaq 100 [NQ100]
Although the index has dropped below 100-day SMA on various occasions, but has managed to rebound from 38.2% Fib. retracement level of its up-move from Oct. 2014 lows through high touched in Nov. 2014. The index, however, might face difficulty in decisively clearing 4200 round figure mark, representing 23.6% Fib. retracement level. Even if it managed to sustain its strength above 4200 mark, it is likely to confront another resistance at 50-day SMA, currently near 4230 region. Hence, a decisive move above 50-day SMA, is likely to be followed by an accelerated up-move towards 4275-80 strong resistance area, which if cleared is likely to trigger a fresh leg of up-move towards 4400 round figure mark resistance level. On the downside, 100-day SMA, currently near 4130-35 zone, now seems to act as an important support, which if broken seems to drag the index, even below 38.2% Fib. retracement level intermediate support near 4100 mark, towards 50% Fib. retracement level support near 4020-4000 region.
Senior Market Analyst
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