Wednesday we saw a gap up and a break of the 27,000 level, which has now become Support. It appears the market is making a move to the top of the wider channel at 27,600, which is our next objective. Watch for downside moves through 27,000
Consolidations like the one we just passed are known as “continuation” patterns, and the target is suggested by the dotted lines. The market is slowly taking ground, and if it can get through 27,600 (the upper resistance line) it could continue to the long term Resistance line. As we break through prior Support or Resistance that becomes the new level. So now, we are watching 27,000 down for signs of weakness.
DJIA – Daily
There is some good news out there that could be bolstering the market at this juncture. Since we finally broke through key Resistance at 27,000 we can now hold a bullish posture unless that line is broken again to the downside. We need to watch for a pull-back and Consolidation to form right at this line. Given recent gains that is a likely possibility, and lines will then form that can be used for action zones.