Key Resistance Levels Ahead

By Colin Twiggs
April 14, 2007 1.00 p.m. AET (11:00 p.m. ET)

These extracts from my trading diary are for educational purposes and should not be interpreted as investment advice. Full terms and conditions can be found at Terms of Use.

USA: Dow, Nasdaq and S&P500

The Dow Jones Industrial Average is trending upwards, headed for a test of the upper border of the trend channel (drawn at 2 standard deviations around a linear regression line). A fall below 12000, though not expected, would signal a secondary correction. The bearish divergence on Twiggs Money Flow (21-day) is easing; a rise above the May 2006 high would signal long-term accumulation.

Long Term: The primary up-trend continues. The first line of support is at the May 2006 peak of 11600, with primary support at the June 2006 low of 10700.

Short Term: The Dow successfully tested support at 12500, with increased volume on Wednesday and a long tail on Thursday indicating support. The break above 12600 signals a test of 12800. Though not expected, reversal below 12450 or the medium-term trendline would warn of trend weakness. Low volumes are expected to continue until resistance at the previous high of 12800 is tested.

The Dow Jones Transportation Average broke through resistance at 5000, signaling continuation of the primary up-trend (and the bull market).

Fedex and UPS appear bearish, however, and reversal to a primary down-trend would warn of an economic slow-down.

The Nasdaq Composite is testing resistance at 2500; the primary significance being that it is 50 per cent of the March 2000 high. Several previous swings have failed to reach the upper border of the trend channel, so it would be premature to assert that an upward breakout is likely. If, however, a breakout occurs, expect a test of the upper channel line; while a fall below 2350 would warn of a secondary correction. Twiggs Money Flow (21-day) signals long-term accumulation, having twice respected the zero line in recent months.

Long Term: The primary up-trend continues.

If the S&P 500 rises above 1460, expect a test of the key 1500 resistance level. Divergence on Twiggs Money Flow (21-day) has eased, respect of the zero line signaling long-term accumulation.

Long Term: The primary trend is up, with support levels at 1325 and 1220.

LSE: United Kingdom

The FTSE 100 is headed for a test of key resistance at 6800/6900 after breaking above its February 2007 high. The calculated target is 6900 ( 6450 + [6450 - 6000] ). Twiggs Money Flow (21-day) is rising steeply, signaling strong accumulation. A fall below 6000 is unlikely, but would warn of a test of primary support at 5500.

Long Term: The primary up-trend continues.

Nikkei: Japan

The Nikkei 225 signals uncertainty, with the index whipsawing around resistance at 17500/17600. The long-term target of 21000 [ 17600 + ( 17600 - 14200 )] remains in doubt until a retracement clearly respects support at the 2006 high. A Twiggs Money Flow (21-day) break below zero or the index falling below 17000 would warn of a secondary correction.

Long Term: The primary trend remains up, with support at the June 2006 low of 14200.

ASX: Australia

The All Ordinaries is testing the upper border of the trend channel drawn at 2 standard deviations around a linear regression line. The calculated target is 6350 ( 6000 + [6000 - 5650] ). Twiggs Money Flow (21-day) displays another bearish divergence, warning of further profit-taking. Reversal below 5650 is unlikely, but would be a strong bear signal.

Long Term: The primary up-trend continues, with the first line of support at the May 2006 high of 5300 and primary support at the June 2006 low of 4800.

Short Term: Profit-taking is evident, with strong volume and weak closes at [W] and [F], but the up-trend remains intact. A retracement that respects support at 6000 would be a bullish sign, while a fall below 5900, though unlikely, would warn of a test of 5650.

One day we must come to see that peace is not merely a distant goal we seek, but that it is a means by which we arrive at that goal. We must pursue peaceful ends through peaceful means.

~ Martin Luther King Jr. (1929 - 1968)

To understand my approach to technical analysis, please read Technical Analysis & Predictions in About The Trading Diary.

	Key Resistance Levels Ahead By Colin Twiggs April 14, 2007 1.00 p.m. AET (11:00 p.m. ET) These extracts from my trading diary are for educational purposes and should not be interpreted as investment advice. Full terms and conditions can be found at Terms of Use. USA: Dow, Nasdaq and S&P500 The Dow Jones Industrial Average is trending upwards, headed for a test of the upper border of the trend channel (drawn at 2 standard deviations around a linear regression line). A fall below 12000, though not expected, would signal a secondary correction. The bearish divergence on Twiggs Money Flow (21-day) is easing; a rise above the May 2006 high would signal long-term accumulation. Long Term: The primary up-trend continues. The first line of support is at the May 2006 peak of 11600, with primary support at the June 2006 low of 10700. Short Term: The Dow successfully tested support at 12500, with increased volume on Wednesday and a long tail on Thursday indicating support. The break above 12600 signals a test of 12800. Though not expected, reversal below 12450 or the medium-term trendline would warn of trend weakness. Low volumes are expected to continue until resistance at the previous high of 12800 is tested. The Dow Jones Transportation Average broke through resistance at 5000, signaling continuation of the primary up-trend (and the bull market). Fedex and UPS appear bearish, however, and reversal to a primary down-trend would warn of an economic slow-down. The Nasdaq Composite is testing resistance at 2500; the primary significance being that it is 50 per cent of the March 2000 high. Several previous swings have failed to reach the upper border of the trend channel, so it would be premature to assert that an upward breakout is likely. If, however, a breakout occurs, expect a test of the upper channel line; while a fall below 2350 would warn of a secondary correction. Twiggs Money Flow (21-day) signals long-term accumulation, having twice respected the zero line in recent months. Long Term: The primary up-trend continues. If the S&P 500 rises above 1460, expect a test of the key 1500 resistance level. Divergence on Twiggs Money Flow (21-day) has eased, respect of the zero line signaling long-term accumulation. Long Term: The primary trend is up, with support levels at 1325 and 1220. LSE: United Kingdom The FTSE 100 is headed for a test of key resistance at 6800/6900 after breaking above its February 2007 high. The calculated target is 6900 ( 6450 + [6450 - 6000] ). Twiggs Money Flow (21-day) is rising steeply, signaling strong accumulation. A fall below 6000 is unlikely, but would warn of a test of primary support at 5500. Long Term: The primary up-trend continues. Nikkei: Japan The Nikkei 225 signals uncertainty, with the index whipsawing around resistance at 17500/17600. The long-term target of 21000 [ 17600 + ( 17600 - 14200 )] remains in doubt until a retracement clearly respects support at the 2006 high. A Twiggs Money Flow (21-day) break below zero or the index falling below 17000 would warn of a secondary correction. Long Term: The primary trend remains up, with support at the June 2006 low of 14200. ASX: Australia The All Ordinaries is testing the upper border of the trend channel drawn at 2 standard deviations around a linear regression line. The calculated target is 6350 ( 6000 + [6000 - 5650] ). Twiggs Money Flow (21-day) displays another bearish divergence, warning of further profit-taking. Reversal below 5650 is unlikely, but would be a strong bear signal. Long Term: The primary up-trend continues, with the first line of support at the May 2006 high of 5300 and primary support at the June 2006 low of 4800. Short Term: Profit-taking is evident, with strong volume and weak closes at [W] and [F], but the up-trend remains intact. A retracement that respects support at 6000 would be a bullish sign, while a fall below 5900, though unlikely, would warn of a test of 5650. One day we must come to see that peace is not merely a distant goal we seek, but that it is a means by which we arrive at that goal. We must pursue peaceful ends through peaceful means. ~ Martin Luther King Jr. (1929 - 1968) To understand my approach to technical analysis, please read Technical Analysis & Predictions in About The Trading Diary.	Share: A+ A− Incredible Charts 10.1 Windows software with proprietary trading tools and stock screens. Download 5-Day Free Trial Try it Now! Incredible Charts 11.0 Proprietary trading tools and stock screens now in your browser. Free Trial 30-Day Free Trial Try it Now! Trading Diary Free education, macro outlook and technical updates: Join Now
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