The succession (five pinpointed here) of breakdowns through the support from Prior Highs – both diagonal and horizontal remains a blight on the market.

Anyone of those supports might have formed a bottom to the market – but none did.

DAILY CHART

So the rally of the last week or so has to be seen in the context of the longer term chart.

Just two of the broken supports are superimposed on this short-term chart – and will act as a medium-term band of resistance.

Certainly the rally has penetrated the first short-term band of resistance 123.76 -124.27, and the near-term down trend resistance (coincident with the horizontal band) but drifting open interest suggests the covering of shorts rather than new longs.

If the rally is to enthuse the bulls, there needs to be a great deal more price action with which the market can build a bottom from which it can convincingly attack the resistances above.

Mark Sturdy
John Lewis

Seven Days Ahead
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