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When almost every market everywhere seems to be breaking out into new all-time highs, that's a strong bullish sign!
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 an all-time high near 4800, and right now is sitting near 2030.
* 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.
Beginning with NI225, a quick chart analysis shows the next top is very likely to form in the 19,500 - 21,000 band. It could eventually push higher, but not before a serious pull-back completes.
That slide from a high of 38,957 to a low of 7604 will be 50% retraced at 23280. So after a serious pull-back from the 19,500 - 21,000 range, a further push to over 23,000 is possible - just don't expect to get there in a straight line!
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 the answer to where the next level of resistance lies may be as close as +2.5% (NDX) or as far as +9.8% (NI225) - the point is that no market climbs higher in a straight line, even when in new territory, so these are two points where we should be on high alert.
About the Author:
Murray Nickel is a mathematician, statistician, and professional trader. He offers a free trial of trading signals for market indices and index ETFs, spot Forex, and spot Gold. He also mentors traders aiming to build consistent success at trading global markets.
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