Afteraction: We saw the bulls try to push out of that downward channel with success. While they did dip back into it a little, they never closed in there again finding some support on the top purple dotted line.
Current Analysis: The bulls move stopped the decline, but only temporarily. It has placed us in a bearish flag which will entertain some sideways movement for now, but ultimately will be a continuation of the downtrend.
Now we have three scenarios.
Scenario #1: We have a quick drop and find support at the intersection of the purple and orange lines in the circle. This should lead to a nice rally and potentially lead to a big push to get out of this down trend.
Scenario #2: We find support on the yellow and purple lines. This will lead to some sideways movement ultimately creating a failing wedge and leading to more downside.
Scenario #3: As this is a flag that we are in, a general rule of thumb is that it will be a continuation of the trend. The target for that is roughly about the length of the pole leading up to the pennant or flag.
Suggestions:
Call: Short
I would wait to pull the trigger until we can get some confirmation on what support is going to hold up.
However, if you are a little antsy and want to pull the trigger in hopes of being at the bottom I would say:
Target: Buy-$6,600 Stop Loss: You should be raising an eyebrow once it startS passing that yellow line until about $6,500. If it drops below that I would start preparing yourself for the drop and place a SL at $6,475.
Remember, don't drink and trade...always ask someone to hold your beer first!
((Guide: Solid Lines: High Strength Support/Resistance Small Dotted Lines: Medium Strength Support/ Resistance Lines with Dash Marks: Low Strength Support/ Resistance Circles: points of interest))