Written by Chris Beauchamp, Chief Market Analyst at IG
Dow still fighting to hold 200-day moving average
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The buyers came riding to the rescue on Monday, causing a bounce from the 200-day simple moving average (SMA).
This saw the price rally off its lows and finish the day above Friday’s lows, a small bullish signal after the losses of the past week. Now the buyers would need to generate additional momentum to suggest that a low has been formed. A close back above the August low around 34,040 would be a bullish development, and might then set up a fresh move towards 35,000.
Sellers will want to see a drop back to, and then a close below, the 200-day SMA to ignite a more bearish scenario.
Nasdaq 100 gives back Monday gains
Unlike the Dow and S&P 500, the Nasdaq 100 avoided a close below its August low.
Monday’s session saw some decent bullish price action, with the price rallying off its lows and finishing well above Friday’s lows. However early weakness on Tuesday has reversed this view. A close below 14,600 would be needed to reverse the first stirrings of a bullish view created by Monday’s price action.
A move back above the 100-day SMA would send a more bullish message, and could then open the way to the August and September high around 15,500, and then on towards 15,760.
Nikkei 225 reverses course
The Nikkei 225 put in a good performance on Monday, building on its recovery from Friday.
However, it then fell back on Tuesday, moving back below the 50- and 100-day SMAs. This then puts the index back into the bearish camp in the short-term, and could see the price head back to last week’s low. Below this the August low at 31,285 beckons.
The index needs a close back above 32,750 to revive the bullish view.