DOW E-MINI Report 24th January 2008

DOW:-

US markets have rallied, and the DOW has broken the 3-day highs, this is the 2nd stage of bottom confirmation, however the DOW is still trading below the January lows and the Weekly 50% level...

The Yearly 50% level is 12374.... (2nd stage of the bear market)

Even though there is a breakout of the 3-day highs, price is still trading inside the Daily channels, and trading below important levels, and whenever the market breaks the 3-day highs, there is an expectation of a 2-day reversal back down before heading higher next week...

I'd be very surprise to see the DOW move upwards without stalling for 2-days before heading higher on the 3rd day.

Levels of interest are 12401 (previous Weekly lows)

And Daily channel highs:- Resistance (don't short trade above those channel highs)

E-MINI

The ES hasn't broken the 3-day high but the same expectation as the DOW.....

Resistance Daily channel highs...

Note: Yearly 50% level 1374 (2nd stage of bear market)

5-day 50% level support...

We can see the coming together of the Daily channels tomorrow, when the daily channels converge together there is more chance of a breakout occurring, therefore I favour price hitting resistance levels and consolidating, rather than a breakout of the Daily channels on Thursday.