LONDON (ShareCast) - Last weeks bad unemployment figures in the US have got the markets on the run with global indices slipping back from their highs and now approaching key support levels.
The S&P500, along with the XETRA DAX in Germany,
are just two of those indices and both of these indices have, over the past few weeks been forming, what chartists call a "head and shoulders" formation.
This pattern, if it unfolds as it should is a bearish formation, which if fully realised, could signal significant declines lower over the coming months for both indices.
The XETRA DAX in Germany, early Monday morning, is currently below a key chart level at 4,675, and a daily close below this key level opens up the potential for a move towards 4,200 over the course of the next few weeks.
The S&P500 price action appears to be unfolding in a similar fashion with the key support levels, as yet unbroken.
The neck line support on the daily chart is currently around 891, and behind that there is a key support level at 877.85 which was the previous highs in the early part of this year. A break and close below these key levels would open up a long term risk of a revisit to levels of around 820.
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