Chart A

Chart A shows that the DJ has broken below the psychological support level of 12,000. We are seeing 3 possible support levels below it. Firstly, there is a trendline support(red) which was tested no less than two times. This is closely followed by a second trendline support(blue). This blue trendline is the long-term trend support for DJ. Should DJ breaks these two trendline support, it will likely lead to more heavy selling. Next, Fibonacci 38.2% support stands guard near 11,500 points. Lastly, a major horizontal support at 11,300 should be the worst case scenario for now. After identifying all the strong support levels, investors are urged not to buy with blind faith with regards to technical analysis. Rather, these are anticipations or what we refer to as market opinion. When an opinion is conjured, it is important for it to be confirmed by market actions. These confirming actions include formation of a candlestick reversal pattern, divergence from an indicator or a bounce off the support As for the resistance levels, the first resistance is seen at 12,180 thereabouts. From Chart A, we can also observe how the index flirted with the 50-day moving average line in the past. Should we test and retrace below the 50-day moving average line, it means that the bears are still in control. On the other hand, if we break above this moving average line, it will be useful to start tracking the 20-day moving average for the anticipated upward price movement. Money flow index is also showing a small positive divergence, this could be an early sign of bear weakness