U.S stock market ready for short-term reversal

The bearish sentiment in the stock market might have been overblown. We could see short-term exhaustion on the bearish move, which provide traders with chance to enter the market aggressively. There is a chance of bearish continuation, but it might be milder than previous week’s move. When the bullish reversal happens, it will happen with strong momentum to close the latest gap and stall for several weeks – months before continuing the upward movement.

Technical Analysis

Dow Jones Industrial Average (INDU)

DJIA index fell sharply and completed the double top pattern in just few days. The index also has reached the 61.8% correction since the October 2024 low. We might see relief rally from the current level with 41,600 level as upward target, or the gap close level. Traders will accumulate long positions aggressively while preparing for another bearish attempt with milder pressure (Seller might have exhausted their stocks).

Bristol Myer Squib Company (BMY)

BMY share prices is under bearish pressure, following the downward movement of the global market. It shows bounce reaction from the daily SMA 200 or the bottom of broadening pattern. The share prices might continue moving inside the pattern for now. However, traders will expect some bearish pressure before the bounce upward materialize. Nevertheless, entering long positions near the current level might provide traders with good risk reward ratio.