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Dow Jones, S&P 500, DAX 30 Forecasts: Indices Target Resistance

Dow Jones, S&P 500, DAX 30 Forecasts: Indices Target Resistance

2019-10-21 18:21:00
Peter Hanks, Junior Analyst
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Dow Jones, S&P 500, DAX 30 Forecasts:

  • The Dow Jones is less than 600 points beneath all-time highs and enjoys nearby technical support
  • The S&P 500 also finds itself in a position of strength, trading 25 points from record levels
  • Similarly, the DAX 30 has continued higher after its September rally, targeting horizontal support from August 2018

Dow Jones, S&P 500, DAX 30 Forecasts: Indices Target Resistance

A strong start to earnings season and a cooldown in US-China trade war tensions have set the stage for new record highs for both the Dow Jones and S&P 500. While the former’s largest component, Boeing, has dragged on the Industrial Average, the broader index has continued to show signs of strength alongside the S&P 500 which is comfortably within reach of all-time highs. With the upcoming string of quarterly reports, a series of strong performances could provide the needed spark for new levels. With that in mind, technical resistance could look to derail such an attempt.

Dow Jones Technical Forecast

Looking to the Dow Jones specifically, the Industrial Average has very little resistance before a new all-time high can be posted. That said, the ascending trendline from prior highs in January and October 2018 has effectively combined with horizontal resistance from all-time highs at 27400. Consequently, very little resistance stands in the Dow’s way, but what does is quite robust.

Dow Jones Price Chart: Daily Time Frame (January 2018 – October 2019) (Chart 1)

DJIA Price Chart Dow Jones Technical Analysis

On the other hand, the Industrial Average enjoys a collection of technical support nearby. First and foremost is an area of horizontal buoyancy provided by prior highs in January 2018 and May 2019. Given its proximity to the current trading price, the level is threatened and could be easily discarded thus requiring subsequent support at 26400.

S&P 500 Technical Forecast

Shifting focus to the S&P 500, the psychologically significant 3000 level continues to play an important role in the Index’s journey higher. As of Monday’s session, however, it seems as though bulls have been able to surpass the mark which could see the topside barrier become support if a daily close above 3000 can be posted. Therefore, the S&P 500 may look to use the zone as a beachhead for an attack higher. Such an attack, if mounted, would look to target resistance at the 3026 level – the Index’s record high – and the ascending trendline from January 2018 slightly higher.

S&P 500 Price Chart: Daily Time Frame (January 2018 – October 2019) (Chart 2)

SPX S&P 500 Index Price Chart Technical Analysis

DAX 30 Technical Forecast

Finally, the German DAX 30 shares similarities with the Dow Jones and S&P 500 despite a considerably different fundamental background. After staging an extension of September’s rally in mid-October, the DAX 30 has surged in the last two months, climbing more than 1000 points. The resurgence has driven it near the 12900 level where a confluence of resistance resides – resistance that will have to be surmounted in pursuit of a continuation higher.

DAX 30 Price Chart: Daily Time Frame (June 2018 – October 2019) (Chart 3)

DAX 30 Index Price Chart Technical Analysis

That said, a brief period of consolidation may be in order to solidify the Index’s gains before driving higher. The drawdown in late September provided such solidification and helped to pave the way for October’s pop. If consolidation is to occur again, look for the horizontal level at 12460 to provide initial support. In the meantime, follow @PeterHanksFX on Twitter for equity updates in the week ahead.

--Written by Peter Hanks, Junior Analyst for DailyFX.com

Contact and follow Peter on Twitter @PeterHanksFX

Read more:Dow Jones, Nasdaq 100 and DAX 30 Forecasts for the Week Ahead

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