Two main trading channels at play right now. Friday was a test of support for the black channel. Good news is that the black channel held but it has broken back into the purple channel.
IMO, if we close next week below the black channel support, then there is more downside. Once we are in the purple channel, there is a long way down that we could see over the next year.
On the positive side, if the price can stay inside the black channel, then we have a good chance at a double bottom and could see a nice rally. If the rally can break the red down channel, then I think we could see price make it back to the 16,000 range. However, I see this as the best we will see for years to come.
I see this 2nd entrance into the purple channel as the chart telling us that is where it wants to be. When we breached into the purple channel in March, it freaked everyone out, clears out stops and then it should have run back into its new channel (which it did). I think it could have retested that purple channel a second time but it should not have closed back into it again IMO. On the way up, the reason was Don't Fight the Fed. At this point, the Fed has changed course and remains hawkish so that statement, Don't Fight the Fed, for the BTFD crowd is no longer working. Also, the YM/ES bearishly crossed the 2 hr 50 EMA on Friday which is always a sell sign for me...typically when this occurs it should not cross back over this EMA on a counter trend so that's where I put my SL. Always love your updates/charts.
Dr_Roboto
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@happyCloud1537, thanks for the feedback and I agree with your analysis. It is going to get ugly again if we have another down day on Monday.
Here is a look at the Nasdaq stocks above the 200 day average. It seems to me that anytime the Nasdaq gets to 30 or less stocks above the 200 day, then it tends to pull back even more towards only 7-12 stocks above the 200, which last about 1-2 months (except 2008 when it last almost 6 months).
Dr_Roboto
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vychod
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@Dr_Roboto, but this correction last for 4 months and there is no sign for change the trend