S&P 500, Nasdaq 100, DAX 40, and SA40 indices forming bullish price reversals?
Major indices the S&P 500, Nasdaq 100, DAX 40 and SA40 have all started to give some technical indication that a change in their respective price trends could be nearing.
Major indices the S&P 500, Nasdaq 100, DAX 40 and SA40 have all started to give some technical indication that a change in their respective price trends could be nearing.
S&P 500 – double bottom testing breakout
The S&P 500 index is currently testing the 4095 resistance level. A close above this level would confirm a double bottom (‘W’) reversal pattern. The reversal pattern would suggest a change in directional trend from down to up.
Should the pattern confirm with an upside breakout, 4300 becomes the initial target from the move, while a close below the 4000 level could be used as a stop-loss indication for the trade.
Nasdaq 100 – double bottom
The Nasdaq 100 (US Tech) also looks to be forming a ‘W’ shaped reversal pattern. The pattern is, however, less evolved than that noted on the S&P500.
A close above 12570 would confirm the pattern, in which case, 13535 would become the initial upside resistance target from the move.
DAX 40
The DAX 40 (Germany 40) is currently testing the breakout level of an inverse head and shoulders reversal pattern. The pattern also suggests a short-term change in directional trend from down to up.
A close above the neckline of the pattern (as is currently trading) would put the pattern into play. In this scenario, 14820 would become the initial upside resistance target from the move, while a close below either the 13850 or 13690 level (depending on appetite for risk) could be used as a stop-loss indication for the trade.
South Africa 40 Cash Index
Our criteria for a bullish price reversal on the South Africa 40 Cash Index is close to being realised.
The index has now broken through trendline resistance and is now testing an upside break of the 63650 level. A close above 63650 would confirm the upside breakout from a double bottom (‘W’) reversal pattern. The ‘W’ reversal is a suggestion that the market has now stopped making lower lows and is now starting to make higher highs i.e. a change in market direction.
Should the close above 63650 confirm, 64555 becomes the initial target from the move. A close above this level would further target 65600 as the next resistance level. In this scenario (should it manifest), traders might consider using a close below today’s (27 May) intraday low at 62900 as a stop-loss indication for the trade.
This information has been prepared by IG, a trading name of IG Markets Ltd and IG Markets South Africa Limited. In addition to the disclaimer below, the material on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication. Although we are not specifically constrained from dealing ahead of our recommendations we do not seek to take advantage of them before they are provided to our clients. See full non-independent research disclaimer and quarterly summary.
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