The mini Dow futures contract (YMZ0) has trended steadily higher over the last two months, covering about 1,300 points during this period of time. However, the index is now testing the high for the year at 11,200, which could become a major decision point for the index.
Resistance at 11,200
The high for the year is 11,206, which was reached on April 26. Since then, the market has had a flash crash, a sideways run, and a rally. The market tested 11,200 yesterday and was immediately hit with selling pressure, which could forecast another big round of weakness ahead.
If 11,200 cannot be crossed, we could see a quick drop back toward near-term support at 10,860, which has held the last two weeks of trading. Watch for a break below yesterday’s low of 11,085 for signs of weakness today.
The fact that the monthly H4 Camarilla pivot level is also 11,200 adds significance to this resistance level.
I will continue to watch 11,200 very closley, however, since the large triangle pattern that was broken in Sepetember still forecasts a target of about 12,180.
Potential Range
Much like the range that formed in April after the February to April rally, we could see the same development form from 10,860 to 11,200 before the next big move occurs. This would actually make sense since the market will likely use a period “rest” or contraction before enjoying another period of expansion.
Again, if 11,200 holds, look for a drop back toward the bottom of the range at 10,860 ahead.
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PivotBoss.com
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