Searching For Resistance
by Murray Nickel
When almost every market everywhere seems to be breaking out into new all-time highs, that's a strong bullish sign!
So is it upwards without limit now? Probably not. But when will the next significant pull-back start?
But not all major market indexes are at new highs. There's two major markets that are still way below their all-time highs, and could help us see where the next bands of resistance lie. One is from USA the other from Japan:
* NASDAQ 100 (NDX) is sitting near 2030 - well below its all-time high near 4800.
* The Japan market reminds us how very long-term a slide from great heights can be (take note re NASDAQ 100). The NI225 - Nikkei 225 Index - peaked way back in 1989 at 38,957 before sliding for fourteen years to a low of 7604 in 2003. At 18,220 today it is over double the low point, but still less than halfway back to that record high set so many years ago.
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.
That slide from a high of 38,957 to a low of 7604 will be 50% retraced at 23280. So after a serious pull-back from the 19,500 - 21,000 range, a further push to over 23,000 is possible - just don't expect to get there in a straight line!
Meanwhile, NDX will have retraced 50% of its decline at 2800, about 38% above todays 2030 level. It also has strong resistance much nearer at hand - at the 2080 level. If it pushes passed this level then the next resistance point is near the top of the trading channel at 2191.
So be prepared for the rally to falter as NI225 approaches 20,000 and/or NDX gains another 50 points to near 2080.
Murray Nickel is a mathematician, statistician, and professional 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 succeed at trading global markets. You can get a unique content version of this article.
|
