Hello traders, welcome to another weekly market outlook from the Zentrader. A lot has happened last week and unfortunately the market hasn’t given us the trade we were looking for. We didn’t enter any trade, so we’re wrong about the scenario and setup, but without a consequence. Which is one of the better ways to be wrong. Before we look at the charts, let’s recap what we were looking for last week. We acknowledged the overall bearish trend we were in, but were looking for one more wave upwards before resuming the bearish trend (aiming to reach the weekly kijun and react off it for the downwards move). Our longer term targets for the bears were discussed in our monthly outlook (linked below): just below 5000, and around 1350.
Now the question remains: are we still looking for the same scenario, one more up and then down? Or is the market breaking down, and are we back into the bearish movement already?
Let’s turn to the charts for answers.
Weekly
Last week we were looking for a move upwards towards the kijun and a bounce off the kijun for a short entry. Now we have to ask ourselves, was this the kijun bounce? And we not going to up once more?
Ichimoku shows us flat momentum on the kijun and tenkan, and on the senkou B (the bottom of the green kumo). So that is not of much help. We’re on a TD 4, which can signal the end of the bounce. We can also see that we’re hanging around a previous area of support. It’s all not very clear, so we’ll have to attempt to answer this question on a lower timeframe.
Daily
So… there’s a lot going on here that we need to pay attention to. Let’s take it step by step.
Price entered the kumo after the rejection at the 0.618 fib failed, and we’re trying to hold the previous resistance area. We\re on an 8 count, and it’s quite inevitable that we’re going to see bullish divergence on the TSI (unless we make lower below 6100 on this push..).
Where does this leave us? And how do we trade this?
We’re still looking for a wave upwards, and then down. Given the depth of the correction we probably won’t go as high as we previously thought, and we probably won’t even go past the previous high. The first resistance is around 7600, so that would be a safe target for the swing.
At the moment we have to wait and see if this support we’re in now holds, tomorrow can be a daily 9, which we’ll look at for reversal tomorrow… If this level does not, we might have to bid our idea of a bullish trade farewell and look for short entries. However, we don’t short support, so we’ll have to see some levels broken before we can consider that.
2HR
We can see we’re in the support zone here. It is key that this level holds to keep our scenario in play. What we’re looking for in the coming days on the 2hr chart is some signals of bullishness from ichimoku. But at the moment it is far too early to predict any of that. It looks like the move is nearing exhaustion, but that never means there’s not another push down!
We need to be patient here, and for the market to give us more clarity. We expect this to happen in the next few days though..
To recap, we’re at a key level here, and we need to hold this level and reverse in the coming few days. If not we will reassume our long term bearish position and look for short entries which comply to our risk rules.
We got safely into the first move up, giving us a good 15% profit, so we’re not in a hurry to enter a trade to ealy, When we have a safe entry, where we can sufficiently define our risk and reward ratio we’ll look to enter. If not we’ll wait for the market to give us another chance, there will always be another opportunity.
We’ll update the setup tomorrow, and see if we have any more bullish signs to enter the trade, or if we need to consider ourselves wrong.
Time will tell…
Now the question remains: are we still looking for the same scenario, one more up and then down? Or is the market breaking down, and are we back into the bearish movement already?
Let’s turn to the charts for answers.
Weekly
Last week we were looking for a move upwards towards the kijun and a bounce off the kijun for a short entry. Now we have to ask ourselves, was this the kijun bounce? And we not going to up once more?
Ichimoku shows us flat momentum on the kijun and tenkan, and on the senkou B (the bottom of the green kumo). So that is not of much help. We’re on a TD 4, which can signal the end of the bounce. We can also see that we’re hanging around a previous area of support. It’s all not very clear, so we’ll have to attempt to answer this question on a lower timeframe.
Daily
So… there’s a lot going on here that we need to pay attention to. Let’s take it step by step.
Price entered the kumo after the rejection at the 0.618 fib failed, and we’re trying to hold the previous resistance area. We\re on an 8 count, and it’s quite inevitable that we’re going to see bullish divergence on the TSI (unless we make lower below 6100 on this push..).
Where does this leave us? And how do we trade this?
We’re still looking for a wave upwards, and then down. Given the depth of the correction we probably won’t go as high as we previously thought, and we probably won’t even go past the previous high. The first resistance is around 7600, so that would be a safe target for the swing.
At the moment we have to wait and see if this support we’re in now holds, tomorrow can be a daily 9, which we’ll look at for reversal tomorrow… If this level does not, we might have to bid our idea of a bullish trade farewell and look for short entries. However, we don’t short support, so we’ll have to see some levels broken before we can consider that.
2HR
We can see we’re in the support zone here. It is key that this level holds to keep our scenario in play. What we’re looking for in the coming days on the 2hr chart is some signals of bullishness from ichimoku. But at the moment it is far too early to predict any of that. It looks like the move is nearing exhaustion, but that never means there’s not another push down!
We need to be patient here, and for the market to give us more clarity. We expect this to happen in the next few days though..
To recap, we’re at a key level here, and we need to hold this level and reverse in the coming few days. If not we will reassume our long term bearish position and look for short entries which comply to our risk rules.
We got safely into the first move up, giving us a good 15% profit, so we’re not in a hurry to enter a trade to ealy, When we have a safe entry, where we can sufficiently define our risk and reward ratio we’ll look to enter. If not we’ll wait for the market to give us another chance, there will always be another opportunity.
We’ll update the setup tomorrow, and see if we have any more bullish signs to enter the trade, or if we need to consider ourselves wrong.
Time will tell…
