Dow Transports Indicate Broader Rally: Charts
The Dow Transport Index is set for a rally toward 4,750, a move that indicates a rise for stocks across the board, Roelof van den Akker, technical analyst at ING Commercial Banking said Wednesday.
The Dow Transports traded around 4,500 late last week and this suggests "further upside potential," van den Akker said.
"We could easily see a test of 4,750 in the coming days to weeks," he said.
"We should consider the Dow Transport as a leading indicator for the other equity markets as well," he said. "If this Dow Transport is the leading indicator for the equity markets, then we should expect that equities should rally further."
"This might be the last move up before we could see a top and a correction," he added. "So sell on strength."
The downward trend in the euro changed on Monday after the European Union agreed on an emergency aid package for Greece, van den Akker said. The euro is now trading in a sideways trend, he added.
"The sideways pattern may result in a bottom formation" for the euro, van den Akker told CNBC.
If it reaches the horizontal resistance level of $1.38 versus the dollar, the euro could develop "a higher bottom of $1.35-$1.36" and rise back above $1.38 to $1.4275, he added.