Dow Jones testing the highs…

By Sandy Jadeja 08:58 29- Sep -2009

The Dow Jones index continues to maintain a positive stance above 9422 – 9435. This indicates that a strong move to the upside is still intact.

Each attempt by the bears to push the index lower has seen the Dow Jones find support at its 20 period moving average followed by a move higher. As long as this pattern continues it may help the Dow reach for the all important 10335 level.

Currently the near term price objective will be the 9917 high which needs to be breached for the bullish momentum to continue and this is also supported by the daily momentum index still showing an upward trend.

September which is typically a weak month has defied the odds by lifting the index higher and is likely to take the Dow into October which may mark a high before a turn takes the index lower. We would need to see both the index trade below its 20 period moving average and also a key signal coming from the momentum index to confirm a top is in place. Until this takes place we would assume that full power is in the hands of the bulls and bucking the upward trend may prove to be dangerous.

A classic pattern of higher highs and higher lows should also be noted as this would need to reverse completely for the bears to say with full confidence that the trend has reversed. Hence former highs should provide support along the way for the Dow.

With October around the corner the Dow will need to maintain a strong uptrend to beat the odds of a bearish month otherwise a nasty fall may be lurking behind the curtain.

Sandy Jadeja is Chief Market Strategist for ODL Markets and founder of www.Spreadbettingtowin.com where he teaches low risk trading strategies and money management.