SMCI, Correction Notice, Price to follow the Money Flow Index
I have always said that Price will follow the Money Flow Index especially when you have Neutral Price Action or a price trending opposite to the MFI; when there is a Strong Divergence contrary to that Price Action I've found that 96% of the time the Price will correct to follow the MFI either up or down. In this SMCI 4 Hr chart you can clearly see one set up from 2 weeks back with a Bullish Divergence on the MFI as the Price was trending relatively Neutral and then all of a sudden the price jumped over the span of 2 days. Now it has gone in the opposite direction with an even stronger Bearish Divergence on the MFI as the price has continued to move higher. Whenever you see these setups it's a critical time to assess your trading strategy and positions and determine how you may wish to adjust your plan. Keep in mind that the longer the divergence the stronger or more likely the correction is to happen.
Comment:
Looking at the chart on a 2 hour time frame I found the most indicators that were concurent to each other. I was not looking specifically for Bearish or Bullish Indicators or Patterns specifically just what revealed itself Best. Other time frames were less conclusive so this is why I chose the 2 hour chart. On the 15 minute chart there was actually a Harmonic Pattern that showed a potential to move back up to $1073 however there were no confirming signals. The chart here shows in Black the most likely Potential Targets.
Comment:
I posted this commentary 2 days ago on the SMCI Forum and thought it was appropriate to add it in here to this commentary.... "Currently the Price has trended almost exactly as I had expected and last suggested near term would be $984 and $959 with $911 being a bit of a stretch although it did come close on Friday with a low of $932 and suggested $869 as a worst case scenario however with the current Triangle Pattern the Price can break out in either direction. Friday actually showed promise of a short term reversal that may swing the price back to $1000, however that is still within the pattern. The .236 Fib Line at $874.14 to me is a more likely scenario going into Financials because a lot of the recent Bullish price movement has already built in Beating the streets estimates although I suspect the numbers won't be as bullish as many expect and so after a small bull run the price will pull back. Again as I also pointed out the recent strength of the run was not warranted by the last Quarterly Financials and the Price Targets the Analysts have set are not justified at this time. Perhaps another 6 or 8 months from now they will be. My Potential Breakout Targets are in Black. What will make a difference here is how the Market Makers set their Bull Trap to catch some buying in on more hype before they pull the plug. This of course is all fwiw and imho." So in the image below on today's 2 hour chart you can see that a Bearish Death Cross has formed with the 50 day EMA crossing over the 200 day EMA . On the daily chart, although there appears to be some strength to a reversal I am still not seeing any indicators to confirm a Bullish move. As well on the weekly chart using a Fib retracement Indicator you can clearly see that the price is well beyond the High Price movement that it should be at. As stated I expect the Bearish momentum to continue.
Comment:
Notice here as the higher highs kept being made almost all of the candles stayed above the the 7 day EMA and from March 15 the candles have mostly been under the 7EMA. You also have a Bearish MA Cross on March 26th. If it manages to stay equal to the 50 day EMA around $880 going into the financials and breaks back above the 7day EMA then it might have a big rally to $1400.00 The potential near term low could be around $800 if it falls below the 50 day ema.
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