Good morning, traders. Once again, it pays to watch the morning live stream. After the breakdown of the small descending triangle, I stated that the most likely scenario was to see price print an SFP around $3200, which is exactly what happened. Price is now consolidating toward the large red descending broadening wedge's resistance. If price pops up and through it, then price should target $3360/$3370. Failure to get that pop will likely see price targeting the $3000 area. I would not be surprised to see this latter scenario develop as there appears to be a concerted effort to push price down toward that level. Watching the order books, any time price gets to the point that it should pop, we see supply being dumped onto buyers while demand remains significant below $3200. One likely explanation is that there are large buyers in that area who are trying to get their orders filled. So, it is just something to keep in mind as price moves. Price is currently working off the hidden bearish divergence on the 1H TF. This clears the way for a possible move up as described above without the impediment of such a divergence to keep it from ascending in the near-term.
The 1D saw a breakdown of the pennant that was printing. The target of that breakdown is $2950 which would pull price through the bottom of the descending wedge and back to the dashed red resistance line which began with the drop out of the $6000s. This would produce a strong bear trap if it plays out prior to December 16/17th. Interestingly, the ATH was on December 17, 2018. The conspiracy theories would run hard and long if that date this year were to produce the lowest point of this correction. There is a possible double bottom printing as well, if not the left shoulder and head of an IHS. RSI continues to flirt with oversold following recent bullish divergence. It has been printing higher lows toward the area of resistance around 32-33. Logically, since we are bouncing off the ascending channel's support, we would look for price to target the top of the channel but this is not guaranteed. Reaching that point also puts price at the red wedge's resistance. Don't forget that a close above that resistance sets up a target of $1150 above the point at which price breaches it. Additionally, reaching that target confirms the double bottom (if an IHS doesn't play out first) thereby creating a target of $5430. If the IHS prints, then I will update with a target based on that particular pattern as well.
Don't forget, we have discussed the possibility of a trip down to the $2500/$2600 area as well, but the further down you continue to look, the greater the likelihood we won't make it that far. What this means for traders is increased risk. The question is, would the increase in profit justify the exponential increase in risk? Only you can decide that for yourself. A good rule of thumb is that if your reward doesn't increase 2x for every 1x of risk your trade increases, then it isn't worth it. The idea is that you should be looking for exponential compensation in order to take on increased risk.
The DXY continued up overnight and into this morning but appears to be potentially topping out one more. I closed out my EUR/USD long yesterday for about 30 pips of profit after it was confirmed that price would not advance any further. I am now long EUR/USD once more. Stocks continue to have a bad time. As usual, early morning buying resulted in distribution the rest of the day. There was a bit of demand showing up toward the end of it, but not enough to create anything more than a doji for the 1D candle. Price now has a lower gap to fill as a result.
Every day, we have a choice to act positively or negatively, so if you get a chance, do something decent for someone today which could be as simple as sharing a nice word with them. You just might change their day, or even their life.
Remember, you can always click on the "share" button in the lower right hand of the screen, under the chart, and then click on "Make it mine" from the popup menu in order to get a live version of the chart that you can explore on your own.
The 1D saw a breakdown of the pennant that was printing. The target of that breakdown is $2950 which would pull price through the bottom of the descending wedge and back to the dashed red resistance line which began with the drop out of the $6000s. This would produce a strong bear trap if it plays out prior to December 16/17th. Interestingly, the ATH was on December 17, 2018. The conspiracy theories would run hard and long if that date this year were to produce the lowest point of this correction. There is a possible double bottom printing as well, if not the left shoulder and head of an IHS. RSI continues to flirt with oversold following recent bullish divergence. It has been printing higher lows toward the area of resistance around 32-33. Logically, since we are bouncing off the ascending channel's support, we would look for price to target the top of the channel but this is not guaranteed. Reaching that point also puts price at the red wedge's resistance. Don't forget that a close above that resistance sets up a target of $1150 above the point at which price breaches it. Additionally, reaching that target confirms the double bottom (if an IHS doesn't play out first) thereby creating a target of $5430. If the IHS prints, then I will update with a target based on that particular pattern as well.
Don't forget, we have discussed the possibility of a trip down to the $2500/$2600 area as well, but the further down you continue to look, the greater the likelihood we won't make it that far. What this means for traders is increased risk. The question is, would the increase in profit justify the exponential increase in risk? Only you can decide that for yourself. A good rule of thumb is that if your reward doesn't increase 2x for every 1x of risk your trade increases, then it isn't worth it. The idea is that you should be looking for exponential compensation in order to take on increased risk.
The DXY continued up overnight and into this morning but appears to be potentially topping out one more. I closed out my EUR/USD long yesterday for about 30 pips of profit after it was confirmed that price would not advance any further. I am now long EUR/USD once more. Stocks continue to have a bad time. As usual, early morning buying resulted in distribution the rest of the day. There was a bit of demand showing up toward the end of it, but not enough to create anything more than a doji for the 1D candle. Price now has a lower gap to fill as a result.
Every day, we have a choice to act positively or negatively, so if you get a chance, do something decent for someone today which could be as simple as sharing a nice word with them. You just might change their day, or even their life.
Remember, you can always click on the "share" button in the lower right hand of the screen, under the chart, and then click on "Make it mine" from the popup menu in order to get a live version of the chart that you can explore on your own.