Yesterday was a very interesting day. We got a massive impulsive candle that took price to a very key level with several stars aligning:
- Psychological level of 3000
- Cross of both EMA50 and EMA 200 on the daily
- Previous clear resistance (now turned support) that had not been revisited yet in this rally
- Touch of a very clear lower trend line of a channel upwards
- Touch of the EMA200 on 4H chart
This is while we know that the fundamentals are aligning as well:
- The Fed announced that they would continue to support the market throughout this crisis (money printer stays on)
- Unemployment numbers are declining and so are unemployment claims
- Presidential election in November, we can expect prices to go up after the election no matter the result from previous election data. We also know that Trumps Ace is the Stock Market, he will do anything it takes to make Fed support the market as it's in his best interest.
What caused yesterdays huge sell off? Profit taking from paper hands. Retail traders have been buying like crazy during this quarantine with their stimulus checks. People who have never invested before. They have only witnessed minor pullbacks with lower momentum and went straight from euphoria to fear in a day.
However, should price break out of the channel with high momentum, we could expect price to drop all the way back to the start of the channel. For now however, stocks and indices are at discount.
- Psychological level of 3000
- Cross of both EMA50 and EMA 200 on the daily
- Previous clear resistance (now turned support) that had not been revisited yet in this rally
- Touch of a very clear lower trend line of a channel upwards
- Touch of the EMA200 on 4H chart
This is while we know that the fundamentals are aligning as well:
- The Fed announced that they would continue to support the market throughout this crisis (money printer stays on)
- Unemployment numbers are declining and so are unemployment claims
- Presidential election in November, we can expect prices to go up after the election no matter the result from previous election data. We also know that Trumps Ace is the Stock Market, he will do anything it takes to make Fed support the market as it's in his best interest.
What caused yesterdays huge sell off? Profit taking from paper hands. Retail traders have been buying like crazy during this quarantine with their stimulus checks. People who have never invested before. They have only witnessed minor pullbacks with lower momentum and went straight from euphoria to fear in a day.
However, should price break out of the channel with high momentum, we could expect price to drop all the way back to the start of the channel. For now however, stocks and indices are at discount.