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Thursday, April 14, 2011

US Dow Reversal Pattern

Posted by Benny at 11:05 AM
The US Dow Jones Industrial Average (Dow) chart formed a Head and Shoulders pattern during the period December 2009 - September 2010. The chart pattern confirmation neckline (S1) was at 9,600 points. The Dow did not go below the neckline and therefore the pattern, which indicates a bearish reversal, was not confirmed. The pattern was canceled when the Dow made new highs and went above the head of the pattern at 11,200 points.

For the past three months, the Dow chart again formed another bearish reversal pattern called the Double Top. The confirmation for the Double top pattern is at 11,500 points and this is currently the support level for the Dow. Therefore, expect a bearish reversal if the Dow breaks below 11,500 points (S2) with a pattern target at 10,600 points. However, if the Dow breaks the resistance level (new highs) at 12,450, then expect the up trend to continue.


Dow Jones Industrial Average (Dow) weekly chart as at 13 April 2011 using NextVIEW Advisor Professional
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