Dow tests major support area - can it bounce?

After last week’s breakout above 40K, the Dow went on to rise a further 1380 points before dropping sharply in the last two days of the week. As a result, the Dow is now back near the breakout area, now testing it from above. Can we see a bounce here?


Given last week’s bullish breakout, the path of least resistance on the Dow remains to the upside, even if we see a little further downside follow-through from here.


Now that it has broken above key resistance and a psychological hurdle of 40,000, this area is going to be the most important support on any further dips. The first line of defence for the bulls was at 40260, which being tested at the time of writing.


By Fawad Razaqzada, market analyst at FOREX.com