For nimble traders, the opportunities will be on both the bullish and bearish side. There should be plenty of volatility to satisfy the appetite of swing traders. We will need to watch out for sudden ‘flash crash’ movements...
Figure 2: Dow Jones Daily is that we have not yet cleared major resistance on the monthly charts at 12876, which will need to be broken for a bullish move. The first five days of January should be monitored: they could point to the direction for the rest of the year.
It looks as though stock indices should provide some exciting moves based on current patterns. Once the consolidation patterns have been resolved both the bulls and bears will be striving to take control. For this reason we look forward to the volatility in 2012.
breakout is needed – traders will just have to wait to see in which direction to trade the break. In the short term the index will need to maintain a firm stance above 5460 and, of course, 5200. If these levels fail to hold at these levels things could get very nasty and a severe drop could be on the cards. For the bulls to return there will need to be a clearance above 5600 to target 5820 and then the 6000 level. Currently the momentum is bullish, but a reversal could occur.
On the Dow Jones resistance at 11472 pushed the index lower. The 11360–11345 level has served well and lifted the market to the upper channel. Momentum remains bullish until the 12350 target is met, but the Dow must hold above 11680 for this to take place. The concern going into 2012
Sandy Jadeja is Chief Technical Analyst for City Index, a leading provider for spread betting, CFDs and foreign exchange. He has been involved with the financial markets for over 23 years and is a respected and widely recognized analyst and trainer in technical analysis and trading strategies. He appears weekly in the media and financial press and can be reached at firstname.lastname@example.org
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