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Technical Update - S&P 500 uptrend weak. Nasdaq 100 struggling for momentum. Dow Jones extends uptrend but is stretched
Kim Cramer Larsson
Technical Analyst, Saxo Bank Group
S&P500 closed higher under light trading last week. In general, the volume was declining day by day indicating a weak uptrend. And it is an uptrend, nonetheless, supported by no RSI divergence.
An uptrend that could continue to strong resistance at around 4,110.
A close below 3,900 is needed to change the uptrend picture. A close below 3,900 is likely to fuel a sell-off down to around 3,800 but there is no strong support until around 3,700-3,647
Contrary to S&P500 the Nasdaq 100 is struggling to confirm its uptrend. RSI is still below 60 threshold after several times of rejection. An Index close above 12K is likely to change that.
However, Nasdaq is showing weakness and a close below 11,500 is likely to trigger a sell-off down to around October lows
If Nasdaq 100 manages to close above 12K a test of the medium-term falling black trendline is likely. Strong resistance at around 12,752.
200 daily SMA also coming down providing resistance.
Dow Jones cancelled the top and reversal patterns moving higher to close above resistance at 34,281. Despite the higher close there is divergence on RSI indicating the uptrend is rather weak forming what could be a rising wedge pattern. A close below the lower trend line in the wedge like pattern could indicate a sell-off down to support at around 33,239 possibly testing the medium-term falling trendline. A close below 33,239 could fuel a strong sell-off to support around 32K-31,727
However, if Dow Jones fail to close below 33,239 the uptrend could extend to 35k-35,294
RSI divergence explained: When price is making a new high/low but RSI values are not making new high/low at the same time. That is a sign of imbalance in the market and an weakening of the uptrend/downtrend. Divergence or imbalance in the market can go on for quite some time but not forever. It is an indication of an exhaustion of the trend
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