Buy the line in the sand. The market is not as well capitalized as everyone thinks, when COVID cripples the economy for 3 months, unfortunately the pain is just beginning.
Seems rather arbitrary. So far 2018 lows have been strong support, If we did see a breach of that level than the 212 level would be next. Why shoot straight for 2008 levels?
LotzToLearn
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I agree with you re further downward potential, but why is the line in the sand drawn there? and not 181, or some other support level?
zaetzj
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@LotzToLearn, I think he's looking at the pre 2008 support there bud.
LotzToLearn
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@zaetzj, Thanks for chiming in. Its actually the 2008 ceiling, and happens to - roughly - be the 2000 ceiling, as well. Support levels tend to be based on past lows, not highs... based on that, should 233 break (set in late 2018), the expected low should be 181 (set in 2016), but as my name suggests, I have lots to learn.
maudelebowski
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@LotzToLearn support levels are not only based on past lows. Once the market moves up above old highs, they will serve as support, no?
LotzToLearn
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@maudelebowski, I guess that could be... but in my mind, previous support is much more reliable support than a previous ceiling.... Think about it, bears tried to break the support level multiple times before but could not, then that support is tested again in the future. Versus, a high is set, then at a later time surpassed, and price begins to drop, approaching a point that it couldn't surpass before... That seems unreliable to me. It's like comparing a hot knife slicing through butter vs concrete foundation.
@LotzToLearn, I believe the shoulder will have support around 200 range and be good for a strong bounce but true bottom will be 150s and will not last very long probably under 24 hours.
LotzToLearn
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@Proteus, What time frame are you looking at to see head and shoulder pattern, and what makes you think true bottom is 150s?