History doesn't predict the future, but it may affect probabilities. I wanted to point out a pattern that is visible on the Chaikin oscillator
in relation to price action. If we go back in time and look at the times the Chaikin has dropped down to -10000 or below, it has marked a low that hasn't been traded afterwards, that is a higher low. One exception, on the dip in late 2013 the indicator hit -15500 (price 545) and ten days later it hit -14100 (price 385). This strong bullish divergence
then resulted in a rally up to almost 1000. Then during 2014 price slowly kept falling the whole year until Jan 2015. This is when the Chaikin hit -9600 (price 220). Price has never come back to this level. The next strong sell off came in Nov 2015, Chaikin -10400 (price 300) Price has never come back to this level. In sep 2017 Chaikin again hit the -10000 (-10450) (price 2970). Price has never came back to this level. And the latest dip, Chaikin hit a record low of -16300 (price 5920). Will this also be a point of no return? Probabilities points in that direction. The deeper the Chaikin dip also the stronger the bounce. It behaves like when you pull a rubber band.
Currently, since most timeframes are bearish
(not the Weekly) we might see price continuing down to 9000 or 8600, the latter is the Monthly S1, which should give support in a bullish
retracement. But it could also move higher from current levels as we see some bullish divergence
. The move down from current high at 11800 does not have the volumes and participation that can take price all the way to the low at 5920, but trend has shifted bearish
and, as I said, further downside could still happen. The 61,8 fib at 8175 will give a nice risk/reward entry point on the long side. A first sign of Bulls stepping in will be a break of the descending channel
, and then a close above the Kijun Sen (white line).
To view the earlier extreme Chaikin points, you need to expand the chart, and drag it back in time. The points are marked in red.