Dow Jones and S&P 500 Charts Building Breakout Patterns
US Indices Technical Outlook:
- S&P 500 building wedge, could use a little more time to fill out
- Dow of course also building a wedge, points to a sizable move
See where our analysts see the stock market heading in the Q4 Equity Market Forecast.
S&P 500 building wedge, could use a little more time to fill out
The S&P 500 has been a difficult handle in the short-term with momentum having stalled after a strong pop mid-month. The index is currently up against a trend-line running down off the record high recorded during the summer.
The trend-line is making up the upper boundary of a developing wedge formation since the early-June low. The pattern is already becoming clear and could make a break for it, but one more swing lower would help really fill out the pattern nicely, even if the eventual breakout is bullish.
With the S&P up against resistance, risk is skewed towards seeing weakness in the near-term, with eyes on the gap down at 2938 and the underside trend-line off the wedge formation, possibly in confluence with the gap depending on the timing of any decline that may unfold from here.
A breakout above the trend-line will increase bullishness up to the record high at 3028. A break above that threshold is needed, though, to really get the wheels turning towards the January 2018 trend-line and possibly beyond.
S&P 500 Daily Chart (swing lower will fill out the wedge)
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Dow of course also building a wedge, points to a sizable move
The Dow has been oscillating in similar fashion as the S&P 500, but slightly weaker in the very near-term as it sits a bit off the highs. The pullback towards tightening up the wedge may already be in progress. On further weakness watch for a swing lower, and how the market might react upon running into the 200-day and bottom-side trend-line of the wedge, they are in approximate confluence. Top-side levels to watch are 27120, 27306, and 27398.
Dow Jones Daily Chart (wedging up)
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.
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---Written by Paul Robinson, Market Analyst
You can follow Paul on Twitter at @PaulRobinsonFX
DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.