In Search Of Resistance
- Date: 2007-07-19 - Word Count: 265
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Emerging markets around the world have pushed to higher and higher record levels. They're now being joined by their more mature cousins - such as DJI, S&P 500, and DAX.
But with so many markets in uncharted territory, it makes it hard for the technical analyst to know just how far a rally might run. Where will the next level of resistance be that results in a significant pull-back?
Luckily there are two well-known key markets that remain well below their all-time highs and may contain some hints at where the next level of resistance lies that could lead to a pull-back. They are:
* NASDAQ 100 (NDX) has rallied from a 2002 low of 794 to near 2030 - but it is still well below its record year 2000 high near 4800.
* NI225 - Nikkei 225 Index, Japan - is sitting at 18,220, less than half of its all-time high set way back in 1989 at 38,957.
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.
If NI225 is to retrace 50% of its 14 year decline, it will eventually carry to 23280, but 20,000 - 21,000 is likely to provide an insurmountable hurdle on the first attempt.
For NDX, the next resistance band is in the 2080 - 2191 range, and if it eventually reclaims 50% of the lost territory it will ultimately push to near 2800 - about 38% above todays level.
So be prepared for the rally to falter as NI225 approaches 20,000 and/or NDX gains another 50 points to near 2080.
But with so many markets in uncharted territory, it makes it hard for the technical analyst to know just how far a rally might run. Where will the next level of resistance be that results in a significant pull-back?
Luckily there are two well-known key markets that remain well below their all-time highs and may contain some hints at where the next level of resistance lies that could lead to a pull-back. They are:
* NASDAQ 100 (NDX) has rallied from a 2002 low of 794 to near 2030 - but it is still well below its record year 2000 high near 4800.
* NI225 - Nikkei 225 Index, Japan - is sitting at 18,220, less than half of its all-time high set way back in 1989 at 38,957.
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.
If NI225 is to retrace 50% of its 14 year decline, it will eventually carry to 23280, but 20,000 - 21,000 is likely to provide an insurmountable hurdle on the first attempt.
For NDX, the next resistance band is in the 2080 - 2191 range, and if it eventually reclaims 50% of the lost territory it will ultimately push to near 2800 - about 38% above todays level.
So be prepared for the rally to falter as NI225 approaches 20,000 and/or NDX gains another 50 points to near 2080.
Related Tags: money, finance, investment, trading, personal finance, financial services, stock markets, banking and investment
Murray Nickel is a mathematician, statistician, and professional trend 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 build consistent success at trading global markets.Get your own completely unique content version of this article. Your Article Search Directory : Find in Articles
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