ARKK price sitting a +3 standard deviations above identified linear regression mean with a potential RSI divergence identified signaling a possible pullback or correction to levels of support.
Linear regression analysis
RSI Divergence
Cumulative analysis
As price action continues to make higher highs and RSI continue to make lower highs, I am looking for a pullback or potential correction to coincide with a potential mean reversion. Using RSI bearish divergence as a signal, I have a higher degree of confidence that this will occur.
Using fibonacci extension/retracement levels as well identified areas of support and resistance as they correspond to linear regression mean and SD areas, key areas of support appear to be at approximately $141.50, $138, and $131.
I will be watching price action over the next few days to watch for confirmation or rejection of this analysis as RSI is still in a bullish range and volume could certainly continue to push price higher and invalidate the currently observed possible divergence signal. A bullish move and breakout of ATH could see a move to $156.
Linear regression analysis
- ARKK's current bull trend beginning on MAR 18 2020 has been well identified
- A linear regression trend pulled to current date gives a Pearson's R maxed at 0.97634... indicating a strong correlation
- Current price is sitting at +3 standard deviations (SD) above linear regression mean
RSI Divergence
- RSI divergence identified from DEC 23 2020 - JAN 15 2021 levels
- As per my own RSI strategy, I overlay fibonacci retracement levels on my RSI indicator
- Previous observations indicate that a price break below the 0.618 RSI level corresponds to a break of identified areas of support when found with a divergence of price action
- Support at RSI range of 48-52 could correspond with a retest of some region of price action support
Cumulative analysis
As price action continues to make higher highs and RSI continue to make lower highs, I am looking for a pullback or potential correction to coincide with a potential mean reversion. Using RSI bearish divergence as a signal, I have a higher degree of confidence that this will occur.
Using fibonacci extension/retracement levels as well identified areas of support and resistance as they correspond to linear regression mean and SD areas, key areas of support appear to be at approximately $141.50, $138, and $131.
I will be watching price action over the next few days to watch for confirmation or rejection of this analysis as RSI is still in a bullish range and volume could certainly continue to push price higher and invalidate the currently observed possible divergence signal. A bullish move and breakout of ATH could see a move to $156.
Trade closed: target reached:
Trade closed.
Support found at $138.
Closed short positions just before market close on JAN 27.
Support found at $138.
Closed short positions just before market close on JAN 27.