Tuesday, December 20, 2011

Dow Jones: Crucial Uptrend Line Support Near 11500 Points To Prevent Further Downside

Wall Street recap: Dow Jones down 100 points on Europe woes
The Dow surrendered the earlier 59-pt gain to end 100 points lower at 11766, mainly due to the fall in financials after investors worried that Basel III capital requirements would provide another blow to the industry. Sentiment was also jolted by ECB’s President cited substantial risks to the economy and said the ECB can’t step up government bond purchases under its founding piece of legislation.

Meanwhile, European finance ministers failed to agree on raising the joint ceiling for the European Stability Mechanism and European Financial Stability Facility.

DJIA outlook: Crucial 11500 support levels
The Dow Jones had retreated 4.2% to end at 11766 from its recent high of 12284 (27 Oct). The fall was driven by the persistent deadlock in Euro debts crisis management and an uncompromised plan and fears of potential en-mass bonds rating downgrades by credit rating agencies, overshadowing the gradual progresses in the recent US economic data.

Following the breakdown of 200-d SMA (11936), mid Bollinger band (11831) and 50-d SMA (11821) supports coupled with the negative technical readings, the Dow may retest lower uptrend line and 100-d SMA supports near 11500. A violation of 11500 will push index lower towards a more solid support of lower Bollinger band at 11250.

Immediate resistance levels are 11936-12284 levels.

Daily DJIA: Crucial Uptrend Line Support Near 11500 Points To Prevent Further Downside

Source: StockCharts.com

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