The Dow Jones Industrial Average (^DJI) broke down from its 10-month ascending channel last week triggered by a 2-month head and shoulders pattern. If you notice, the 50 and 100-day moving averages have also been breached along with the MACD diving towards the negative territory. These are clear signals of weakness in the US market. Adding the size of the head and shoulders to the breakdown point, our target price could be the 2-year uptrend line which is a strong support. However, if this breaks, our fallback could be the 22-month support line.
The US benchmark is currently hanging around the 12,000.00 psychological level after dropping by almost 10% in less than 2 months. Personally, I’m expecting a bounce at this area as for my sentiments. I may be wrong but in case it does, 12,093.90 could be our immediate resistance. Then the next resistance after that could be 12,271.90. Above all, as long as the 2-year uptrend and the 200-day moving average of the ^DJI remains intact, my bias on its direction is still upward despite the negative sentiments in the global markets.