Reached Resistance. Retracement Expected.
“…this behavior suggest more upside for Monday, because we basically held at the Support Level. All indications are that we will slowly climb to the resistance line at 26,300.” This is indeed what happened Monday, and we were right at 26,300 by Monday’s close.
The Daily Chart continues to show the wide consolidation, with the market resting on 25,000 as mentioned above. The market continues to hold its bullish posture, but that could change with any significant news entering the market that could affect the look forward.
Now that we have reached short term resistance, we should expect a brief retracement, possibly 38% of the small range back to 25,800. Than, if it can break this level we can reasonably expect a move to the top of the wide range shown in the Daily Chart.
The market is behaving in a rather normal and predictable way, slowly gaining with the usual pull-backs as it forms solid support or resistance levels. These levels are evident to market players without the lines – they see where price has stopped before and it affects their decisions. Once a key “line in the sand” is broken, everyone piles on. It’s as simple as that.