Easter Market Overview

Let’s quickly look at the charts of some of the indexes to see what may happen next week!

First, the Dow Jones Daily:

There are significant levels of resistance for the bulls to overcome, the first of which is the falling 50 period moving average; the second is the horizontal line beneath 12,800 which has sustained numerous price reversals previously.

To help the bulls potentially overcome these levels, there is a positive momentum divergence which is resolving itself.

Last week was extremely volatile, as we saw a complete swing of over 600 points. On to the weekly chart:

We see similar resistance on the weekly chart around the 12,500 and 12,750 area (from the moving averages and that seemingly nasty horizontal line which has served as both support and resistance since last year.

Again, we see a weekly positive momentum divergence which mirrors the daily positive divergence, which could give the bulls some enhanced strength.

Volume also picked up the last two weeks (keep in mind that Friday was a holiday, and the markets were not open).

Finally, I wanted to show this chart also of the US Dollar Index:

The Index has been under so much pressure lately, yet has rallied in a strong counter-trend swing last week which places the index also near key resistance from the falling 20 period moving average.

A counterswing was highly likely due to the immense selling pressure of the last leg down. Keep in mind that many major commodities (gold, oil, etc) fell very sharply last week – some of them even corrected near 10%.

Keep your eye on these types of inter-market relationships to deepen your analysis as you move forward.

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Next week should be much calmer than last week. Still take it easy and ease back in slowly if you need to.