FB broken triangle, then a sharp rally followed: Post Analysis
The bear thesis initially relied on that It has broken the daily 267 and 200 MA of 272. And it may be in a C move of a corrective ABC.
Monday's mega-cap rally, including AAPL, AMZN, FB, GOOGL, to less extend NFLX (but not NVDA) blow the bear story up.
What could we learn from Friday's chart, to possibly foresee the rally, instead of predicting a further decline?
Looking back, 3 clues:1. MACD was tilting upwards; 2. last 4H candle was an indecision one; and 3. Stoch RSI also tilted up slightly (crossed).
The point of this exercise is that, while we are looking through the lense of a chart, we quite often look for clues to reinforce our initial belief or the current trend (confirmation bias) or not assess all the clues such as the quality of the candle (esp. on the large frames like 4 hr or D) and the slope of MACD and Stoch RSI.
Pattern analysis like ABC or Measured move (which often looks at the absolute mathematically focusing on the path), works better when combined with other indicators like MACD or RSI or momentum clues.
So the lesson is to look at the market first, then the structure, the patterns, Support / Resistance, Fibs, and the direction of the candle as well relative momentum indicators like RSI or MACD, or CMF.
Lastly, the importance of 200 MA and Daily support is relative, not absolute. The fact FB broken both then recovered right after, give pause to the theory of once major support is broken, the trend would continue.
Monday's mega-cap rally, including AAPL, AMZN, FB, GOOGL, to less extend NFLX (but not NVDA) blow the bear story up.
What could we learn from Friday's chart, to possibly foresee the rally, instead of predicting a further decline?
Looking back, 3 clues:1. MACD was tilting upwards; 2. last 4H candle was an indecision one; and 3. Stoch RSI also tilted up slightly (crossed).
The point of this exercise is that, while we are looking through the lense of a chart, we quite often look for clues to reinforce our initial belief or the current trend (confirmation bias) or not assess all the clues such as the quality of the candle (esp. on the large frames like 4 hr or D) and the slope of MACD and Stoch RSI.
Pattern analysis like ABC or Measured move (which often looks at the absolute mathematically focusing on the path), works better when combined with other indicators like MACD or RSI or momentum clues.
So the lesson is to look at the market first, then the structure, the patterns, Support / Resistance, Fibs, and the direction of the candle as well relative momentum indicators like RSI or MACD, or CMF.
Lastly, the importance of 200 MA and Daily support is relative, not absolute. The fact FB broken both then recovered right after, give pause to the theory of once major support is broken, the trend would continue.
Comment:
Other factors to take into consideration are relative value, sector money flow, and investor sentiment. Q: how does one track dark pool money flow?