This week’s price action is likely to prove crucial for equities long-term, according to Andy Dodd, Head of Technical Research at Louis Capital Markets.
Dodd says this is because it is the last week of trading before the monthly charts complete their latest candles. High closes will suggest more upside over the coming months whereas a move towards the current monthly lows will have the opposite effect.
Dodd sees bearish signals creeping in on short term charts indicating further upside will be limited. This includes a bearish Island Reversal candlestick pattern on the Dow Jones Transportation. If Dow Theory proves correct, this means other indices are likely to follow the DJ Transportation downwards.
Read the full report, including an analysis of the following futures markets:
Dow Jones Transportation
EURO STOXX 50
STOXX Europe 600