Tag of Resistance for Indices

After yesterday's action it was positive to see indices hold their gains. The Russell 2000 had a breakout to protect, and it did so with ease. The 'bull trap' from April will be under pressure if tomorrow sees more gains.

The S&P tagged 2,120 on lower volume buying. Look for a defense of the 'bear trap', which lies close to the 50-day MA, if sellers pay a visit.

Like the Russell 2000, the Nasdaq experienced tight action, but unlike the Russell 2000, it remained below resistance. The bearish wedge remains the dominant pattern, and today's close left it in the middle between wedge support and resistance.

Assuming no premarket strength, shorts may look to attack resistance. However, a push above resistance would force shorts to cover, and bring in new longs - so it's not a trade to hang on to if it goes against you early. An opening gap higher in the Nasdaq would offer a straight long breakout trade; look for a push to wedge resistance.

You've now read my opinion, next read Douglas' and Jani's.

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Dr. Declan Fallon is the Senior Market Technician and Community Director for Zignals.com, and Product Development Manager for ActivateClients.com. I do a weekly broadcast on Friday's at 13:30 GMT for Tradercast, covering indices, FX and gold, silver and oil - all are welcome! You can read what others are saying about Zignals on Investimonials.com.


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