The above 10-day is fascinating. One way or another a significant move with the index shall occur by mid-August. No ifs no buts. Price action is approaching the apex. Resistance repeatedly tested until a ‘fake-out’ and then break-out resulting in a 30% rally.
Price action is now in a bearish rising wedge formation. Typically rising wedges breakdown. Can it break up? For sure. However it is improbable. Furthermore, look below at Stochastic RSI (circled in orange) now at 99 and on on a 10-day chart. Above 20 for 380 days! Look left, this rally is significantly overbought. There is no where left to go.
The question now is not will it go down or even when will it go down but rather how far will it go down?
“The Rising Wedge Breakdown” from Investorpidia:
“One thing experienced traders love about this pattern is that once the breakdown happens, the target is reached very quickly. Unlike other patterns, where a confirmation must be shown before a trade is taken, wedges often do not need confirmations; they normally break and drop fast to their targets. Targets are usually located at the beginning of the upper trendline,”
www.investopedia.com.../07/rising_wedge.asp
If the above holds true we’ll see a correction of up to 46% - are you ready for that?!
The first support is the broken trend line at -24%.
What if the -46% does not hold support? Then a much deeper correction to 60% could occur. On the 2-month chart below there is significant support available from the 2007/8 highs where previous resistance has not yet been confirmed as support. This would be excellent structure for the market going forward were it to occur.
Action? A sell from 4500 is amazing if you can get it.
Price action is now in a bearish rising wedge formation. Typically rising wedges breakdown. Can it break up? For sure. However it is improbable. Furthermore, look below at Stochastic RSI (circled in orange) now at 99 and on on a 10-day chart. Above 20 for 380 days! Look left, this rally is significantly overbought. There is no where left to go.
The question now is not will it go down or even when will it go down but rather how far will it go down?
“The Rising Wedge Breakdown” from Investorpidia:
“One thing experienced traders love about this pattern is that once the breakdown happens, the target is reached very quickly. Unlike other patterns, where a confirmation must be shown before a trade is taken, wedges often do not need confirmations; they normally break and drop fast to their targets. Targets are usually located at the beginning of the upper trendline,”
www.investopedia.com.../07/rising_wedge.asp
If the above holds true we’ll see a correction of up to 46% - are you ready for that?!
The first support is the broken trend line at -24%.
What if the -46% does not hold support? Then a much deeper correction to 60% could occur. On the 2-month chart below there is significant support available from the 2007/8 highs where previous resistance has not yet been confirmed as support. This would be excellent structure for the market going forward were it to occur.
Action? A sell from 4500 is amazing if you can get it.
Comment:
Crash talk is everywhere.
Something interesting with the close of last weeks candle (shown below).
1) It closed as a 'bullish engulfing' candle.
2) This candle closed on past resistance.
3) RSI just printed another higher low.
In summary, the trend is up and looking stronger by the day - this melt up is going to be impressive. Don't fight the trend when signalling to stay long but the risk is far greater than at any point before.
I still think 4500 is an amazing exit point if you can get it as this is the area where the rising wedge shown on the 10-day chart above has maximum convergence.
Something interesting with the close of last weeks candle (shown below).
1) It closed as a 'bullish engulfing' candle.
2) This candle closed on past resistance.
3) RSI just printed another higher low.
In summary, the trend is up and looking stronger by the day - this melt up is going to be impressive. Don't fight the trend when signalling to stay long but the risk is far greater than at any point before.
I still think 4500 is an amazing exit point if you can get it as this is the area where the rising wedge shown on the 10-day chart above has maximum convergence.
Comment:
Very close to 4500 now as is price action reaches the apex of the rising wedge. Something else that's interesting, RSI is now at the same level as in March 2020 (green circles). Additionally stochastic RSI has crossed over to bearish (red shaded area).
Be super careful.
Be super careful.
Trade active:
Becoming a little tooty fruity at the top, bearish engulfing candle forming on the 10-day chart below. If confirmed expect a 20% correction to 1st support, which would be a back test of previous resistance.
Comment:
On this 2-day chart there is a closer view of the long term resistance (years of resistance / green line) that was recently broken, which is now currently being back tested.
The next few trading sessions should be very interesting! If it holds it would be a very bullish signal. If it fails, it's a long way down.
The next few trading sessions should be very interesting! If it holds it would be a very bullish signal. If it fails, it's a long way down.
Comment:
correction 1-day chart
Trade active:
Brace yourself, America waking up in a few hours, you know drill... Look left for details.
Trade active:
"Trade Active" or is it?
Watch 4300 carefully. While the above bearish rising wedge appears to be playing out, there's a bigger picture on the 10-day chart that suggests this correction is nothing more than a back test of past resistance.
Therefore watch 4300 carefully. Below this level favours the bearish rising wedge breakdown.
A bounce from 4300 suggests a successful back test, which would start a melt up that makes the last one look like a bump in the road.
Watch 4300 carefully. While the above bearish rising wedge appears to be playing out, there's a bigger picture on the 10-day chart that suggests this correction is nothing more than a back test of past resistance.
Therefore watch 4300 carefully. Below this level favours the bearish rising wedge breakdown.
A bounce from 4300 suggests a successful back test, which would start a melt up that makes the last one look like a bump in the road.
Comment:
The wedge breakdown
Comment:
Price action (or is that index action?) has, as we know, broken outside the wedge and now appears to be climbing to kiss the underside, which is at 5300. A test of resistance here (around January) could very well result in a significant crash.
Comment:
On the 10-day chart below a significant correction has begun following the bearish divergence since price action broke out of the rising wedge.
Price action is approaching two areas of support.
1) 4200. Expect support here. Look left, it took price action several attempts to break this resistance. This will be the first time ever in the index history price action will be back test this resistance as support. If support is confirmed, except a massive rally to the upside target 6000+
2) 3800. This would be a MASSIVE buying opportunity. The 70 week EMA (red line) has been significant support / resistance throughout the entire history of the index. Look left. I don’t know why, just an observation.
Good luck!
Price action is approaching two areas of support.
1) 4200. Expect support here. Look left, it took price action several attempts to break this resistance. This will be the first time ever in the index history price action will be back test this resistance as support. If support is confirmed, except a massive rally to the upside target 6000+
2) 3800. This would be a MASSIVE buying opportunity. The 70 week EMA (red line) has been significant support / resistance throughout the entire history of the index. Look left. I don’t know why, just an observation.
Good luck!
Comment:
Expect the market to go up like a rocket when it opens today. I know everyone is bearish, but we the 5% don't think like the crowd.
Trade closed manually
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Allow 3-6 months on ideas. Not investment advice. DYOR
On the weekly below resistance was broken and is now currently back testing for support. If this somehow becomes support, IF, we're going to see a monster rally. There's no resistance up here.