A serious dissection of the daily chart to provide a framework for my trades on the 4hr.
Trend verdict: Down
Primary Reasons:
Recent broken uptrend
Well tested downtrend
Bollinger squeeze result
Downtrending RSI
Stochastic Bull/Bear setup
CMF conditions
Complete lack of any immediately bullish signals (not counting the 'bull' part of the bull/bear setup)
Most likely sounding scenario:
Retest of (iii) followed by eventual break of (iv)
The following analysis emphasizes particular scenarios to be prepared for. Take these for what they are: exercises in preparedness and thought experiment. This is NOT a comprehensive list of possibilities.
Regarding the RSI:
It either (1) follows the trend line down or (2) breaks upwards.
Case (1): Either a new RSI low is made (1a), or it is not (1b)
Case (1a): It looks like a new RSI low would also result in breaking (iv). This should then result in extreme bear action, and an 'entrenched' RSI. There is no uptrend such as (i) to support the argument for a quick spike and rebound. It may be possible to form a new RSI low without breaking (iv) as well.
Case (1b): A higher low on the RSI would form the makings of a bullish failure swing. Closing above 45.58 would confirm the swing signaling the start of a new uptrend. After a failure swing we expect an overbought RSI to be achieved. A fitting scenario would be a bounce off (iv) followed by a break of (iii) and test of (ii) (reminder: this is not necessarily a resistance level as it is unconfirmed).
Case (2): If the RSI breaks its trend line upwards without pausing for a failure swing, a break of (iii) seems likely (though a simple retest is possible). This case is far more indeterminate than (1), since lack of the failure swing diminishes the signs of trend reversal, while the possibilities of moving right into overbought levels or forming a larger failure swing coexist.
Trend verdict: Down
Primary Reasons:
Recent broken uptrend
Well tested downtrend
Bollinger squeeze result
Downtrending RSI
Stochastic Bull/Bear setup
CMF conditions
Complete lack of any immediately bullish signals (not counting the 'bull' part of the bull/bear setup)
Most likely sounding scenario:
Retest of (iii) followed by eventual break of (iv)
The following analysis emphasizes particular scenarios to be prepared for. Take these for what they are: exercises in preparedness and thought experiment. This is NOT a comprehensive list of possibilities.
Regarding the RSI:
It either (1) follows the trend line down or (2) breaks upwards.
Case (1): Either a new RSI low is made (1a), or it is not (1b)
Case (1a): It looks like a new RSI low would also result in breaking (iv). This should then result in extreme bear action, and an 'entrenched' RSI. There is no uptrend such as (i) to support the argument for a quick spike and rebound. It may be possible to form a new RSI low without breaking (iv) as well.
Case (1b): A higher low on the RSI would form the makings of a bullish failure swing. Closing above 45.58 would confirm the swing signaling the start of a new uptrend. After a failure swing we expect an overbought RSI to be achieved. A fitting scenario would be a bounce off (iv) followed by a break of (iii) and test of (ii) (reminder: this is not necessarily a resistance level as it is unconfirmed).
Case (2): If the RSI breaks its trend line upwards without pausing for a failure swing, a break of (iii) seems likely (though a simple retest is possible). This case is far more indeterminate than (1), since lack of the failure swing diminishes the signs of trend reversal, while the possibilities of moving right into overbought levels or forming a larger failure swing coexist.
