Date: Monday 18 Jun 2012
On Friday, we saw how the Dow Jones closed the week above the resistance level at 12,600 – 12,650 points. This was a signal to execute a stop-loss order on any short positions that we may have been opened and thus limit potential losses. We believe that the bullish momentum that produced the breakout of resistance at 12,650 points is leaving behind a small reversal in the form of an inverted "head and shoulders" formation with a minimum price target at this year's high of 13,300 points.
We are aware that the equity benchmark index may find resistance at 12,850 points but we will be well-positioned with a stop-loss order at 12,400 points. As long as the Dow Jones does not close below 12,400 points, we will expect the rebound to continue towards the annual high.
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