In Search Of Resistance

Emerging markets around the world have pushed to higher and higher record levels. They're now being joined by their more mature cousins - such as DJI, S&P 500, and DAX.

But with so many markets in uncharted territory, it makes it hard for the technical analyst to know just how far a rally might run. Where will the next level of resistance be that results in a significant pull-back?


Luckily there are two well-known key markets that remain well below their all-time highs and may contain some hints at where the next level of resistance lies that could lead to a pull-back. They are:

* NASDAQ 100 (NDX) has rallied from a 2002 low of 794 to near 2030 - but it is still well below its record year 2000 high near 4800.

* NI225 - Nikkei 225 Index, Japan - is sitting at 18,220, less than half of its all-time high set way back in 1989 at 38,957.

Starting with the Nikkei 225, the next strong resistance band should be in the 19,500 - 21,000 range, with any push over 20,000 likely to be brief and lead to a strong pull-back.

If NI225 is to retrace 50% of its 14 year decline, it will eventually carry to 23280, but 20,000 - 21,000 is likely to provide an insurmountable hurdle on the first attempt.

For NDX, the next resistance band is in the 2080 - 2191 range, and if it eventually reclaims 50% of the lost territory it will ultimately push to near 2800 - about 38% above todays level.

So be prepared for the rally to falter as NI225 approaches 20,000 and/or NDX gains another 50 points to near 2080.

By: Murray Nickel

Article Directory: http://www.articledashboard.com

Murray Nickel is a mathematician, statistician, and professional trend trader. He offers a free trial of trading signals for global market indexes and index ETFs, spot Forex, and spot Gold. He also mentors traders aiming to build consistent success at trading global markets.
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