Bullish Reversal in US indices last Friday - Will the uptrend resume?

DJIA made an ATH on Aug 5, 2026 and has been retracing since then. Last Thursday, the futures dipped into a prior narrow congestion zone by forming a Big Red candle. Such zones are known to offer strong support. It was no surprise to see a strong reversal the next day, a Bullish Engulfing like candle that just stopped short of engulfing the prior red candle.

Nasdaq broke out of a very prominent narrow congestion zone on Aug 13, 2026 in the prior week. However, the breakout proved to be false with the price reversing back into the range to test the lower boundary of the zone last Thursday. The price action formed a Bullish Harami last Friday at horizontal support, a strong reversal signal.

Both the frontline indices have generated reversal signals after a retracement of a larger uptrend. Is it time for the larger uptrend to resume? Looks strongly likely, technically.

However, the macro picture speaks differently. The 30-year Treasury yield reached about 5.33% on August 18, its highest level since 2007, while the 10-year reached about 4.74%. The sharp rise reflects ballooning US government borrowing and high oil prices stoking higher inflation fears. This could eventually impact the US stocks adversely.

While the technical picture signals a reversal, will it sustain the headwind of the macro realities? Only time can tell.

Please scroll below to subscribe for regular updates on global financial and commodity markets.