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S&P 500/Dow Jones Technical Outlook:

  • S&P 500 continues to struggle around 3k, top-side t-line
  • Dow Jones continues to churn at 2018-present t-line

See how the quarterly forecast has played out what it could mean for the big-picture – Q2 Equity Markets Forecast.

S&P 500 continues to struggle around 3k, top-side t-line

Less than two week ago the S&P 500 first touched the trend-line extending over from the 2018 peak, and as of Wednesday found itself retesting this important threshold. So far the market is holding up well given the extensive rise it’s had off the June low, which is the positive.

The negative is that while trading in record territory these types of overhead trend-lines can turn into meaningful forms of resistance. Especially when you consider that it could become part of a giant Reverse Symmetrical Triangle (RST) or Megaphone pattern.

From a tactical standpoint these types of conditions are tricky for short-term traders. On one hand you have a market that is drawing in few sellers, but on the other it is trading at material resistance. In my view, this makes risk/reward unfavorable for neither side to initiate fresh positions until we see further price action.

Check out the IG Client Sentiment page to see how retail traders are positioned and what it could potentially mean for various currencies and markets moving forward.

S&P 500 Daily Chart (3k, t-line)

S&P 500, Dow Jones Charts: Struggling at Big-picture Slopes

Dow Jones continues to churn at 2018-present t-line

Just as the S&P is trading at the 2018 top-side trend-line, so is the Dow Jones. It also has another, albeit minor, trend-line extending higher from a peak created in February. It’s of course the same deal as with the S&P; price action is bullish until it’s not, but resistance stands firmly in the way. With two lines crossing overhead the Dow has a little bit stronger of a lid on it than the S&P.

In wait-and-see mode, but we should start to see something in the days ahead that could give us further indication as to what to do next.

Dow Jones Daily Chart (struggling at t-line)

S&P 500, Dow Jones Charts: Struggling at Big-picture Slopes

To learn more about U.S. indices, check out “The Difference between Dow, Nasdaq, and S&P 500: Major Facts & Opportunities.” You can join me every Wednesday at 10 GMT for live analysis on equity indices and commodities, and for the remaining roster of live events, check out the webinar calendar.

Tools for Forex & CFD Traders

Whether you are a beginning or experienced trader, DailyFX has several resources available to help you; indicator for tracking trader sentiment, quarterly trading forecasts, analytical and educational webinars held daily, trading guides to help you improve trading performance, and one specifically for those who are new to forex.

---Written by Paul Robinson, Market Analyst

You can follow Paul on Twitter at @PaulRobinsonFX