The US stock markets paused a bit during the week, as we head towards the Memorial Day weekend, the unofficial start of summer in the United States. We are testing significant resistance barriers above, so it makes sense that we may see a bit of short-term softness.
The Dow Jones 30 initially trying to rally during the week but came back a lot of the gains as the 25,000 level continues to be resistance. Forming a shooting star of course is a negative sign, especially when you do it a couple of weeks in a row. I believe that we will probably pull back to test the uptrend line again, or at the very least the 24,500-level underneath. Alternately, we break above the couple of shooting stars, the market could continue to go much higher, perhaps reaching towards the 25,500 level, followed by the 26,000 level. The uptrend line underneath continues to be massively important, as it defines the entire uptrend.
The NASDAQ 100 rallied significantly during the week, reaching towards the 7000 handle. That is the top of the range for the last couple of weeks, so the fact that we fail there is not a huge surprise. If we can break above the 7000 handle, you can see that there is a shooting star that extends to the 7200 level. If we can break above that level, then we are finally free to go much higher. I think short-term pullbacks will be likely, but those should be buying opportunities as we are in and uptrend. However, we are definitely on the precipice of some type a significant move, so we need to decide which direction we are going to go. Until we break down below the uptrend line though, I think it’s safer to buy.
Being FXEmpire’s analyst since the early days of the website, Chris has over 20 years of experience across various markets and assets – currencies, indices, and commodities. He is a proprietary trader as well trading institutional accounts.