DAX 40, Dow and NASDAQ 100 on track for weekly loss
DAX 40 consolidates below record high
The DAX 40 has come off Monday’s most recent record high at 19,683 and slid below its late September peak at 19,492 while on track for its first weekly loss in three.
While the 19,492 September peak isn’t bettered, further downside pressure is likely to be seen as this week’s high has been accompanied by negative divergence on the daily Relative Strength Index (RSI). This often acts as a precursor to weakening in the trend and can also be interpreted as a warning sign of an impending trend change.
A fall through this week’s low at 19,301 would most likely put the August and mid-September highs at 19,048-to-18,994 on the map. A drop through the 18,949 early October low would likely lead to a medium-term bearish trend reversal taking shape.
Dow Jones Industrial Average on track for negative week
This week’s 1,000 point drop in the Dow Jones from last week’s record high has so far taken it to Thursday’s 42,194 low, a fall through which would engage the August-to-October uptrend line at 41,880 and also the early October low at 41,802.
Were the 41,802 low to give way, the July-to-August highs at 41,587-to-41,382 would be next in line.
Minor resistance sits between the late September high at 42,637 and the mid-October low at 42,676. While this resistance zone caps, downside pressure will retain the upper hand.
NASDAQ 100 on track for first weekly loss in over a month
The NASDAQ 100's rise from its early October 19,611 low to its three-month high at 20,499, to above its September peak at 20,316, and close to its July record high at 20,760, has been followed by a sell-off to this week’s low at 19,928. Were it to be fallen through, the early October low at 19,611 would be back in sight. Failure there would lead to a medium-term top being formed with the 200-day simple moving average (SMA) at 18,818 being back in view.
Good resistance can be spotted between last week’s high at 20,445 and the October peak at 20,499. Were this resistance zone to be exceeded, the long-term uptrend would be deemed to have resumed with new record highs being in the pipeline in this scenario.