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The support band defined as 14,394-14,556 remains intact, however, as does the uptrend towards my target at 16,175.
In today's Dow update I return to my secondary chart on the index, highlighting the minor resistance behind its current hesitation. At the centre of this resistance band lies the line representing a 50% rise from the October 2011 low. The Dow hesitated in 2012 following a rise of 25% from this same low, and it is not surprising to see similar resistance following a ‘doubling’ of this earlier move. Also featuring in this resistance band is the line representing a 25% rise from the low in November 2012. Despite this, the resistance appears isolated, which is why it is not included on my primary chart of the Dow, and the stronger-looking band defined as 16,023-16,186 is still likely to prevail ultimately.
On a positive note, the bounce from last Wednesday's intraweek low coincided with a fall in the Japanese yen to above 98 on the US dollar cross-rate. I defined this level in last week's note as the tipping point for increased downside momentum in global equity markets.
Recommendation: stay long. A move above 15,600 will provide the trigger for a sharp advance to my target at 16,175, where profits should be taken. Stop-losses can be activated on weakness below 14,350.