Trends are Downward; However, a likely reversal could come
I'm still sitting at my position of 3600, and with all the Downtrending timeframes, one might wonder why. I'm taking this position, because even if we are going to go down further, our current price action is beginning to be oversold too far away from our trends of the 3hr and above, excluding perhaps the Daily. So, on a short-term basis of the next week, I feel we will need to correct this.
To see when the last time this occurred, we need to look at that rally that began in June and went into all of July. While you can't find my videos on this rally (more on that at the end), I had continued to say we were overbought in that rally and were beginning to rely solely on trends like the 2hr and below to guide us. While the 2hr is one of my favorite timeframes to utilize, it does not guide the momentum of the market by itself on a much longer-term basis. We had left the 3hr to 6hr uptrends in that rally behind at around 3900 to 4000, and after we got about 300-400 points ahead of ourselves, we had that major pullback that ultimately led to this descent we are currently on. Short term confirmation of this rally will be if price pushes above the 1Hr lower low Downtrend-Downtrending Line.
Once this rally begins, major levels I would look for would be;
3745, 3830, 3950, and 4037. The first three are major volume trading zones, and 4037 is a gap that I don't know we could push passed up into the next peak zone at this time even in a best-case scenario.
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Additionally, other reasons I feel confident going long are as follows;
MFI is Oversold significantly. The last time this year MFI was this oversold was 1/25/2022. A rally began afterwards.
The MACD Momentum Trend (close to MACD but slightly different) has hit the -100 level. We have had a rally every time this year when the MACD Momentum has reached this level.
I still don't like that the lower low Downtrend-Downtrending Line of the Daily (not shown on the current chart, may add) is higher in price action than the lower high Uptrend-Downtrending Line. This is an improper funnel.
There is only employment and manufacturing data this week, and unless something runs far outside expectations, I'm not sure any of it will cause a headline surge, so we are going to be trading on a more technical level rather than an emotional level this week.
Earnings season will begin here shortly, and historically, earnings seasons have been a rally time.
The Weekly is technically still in an uptrend with the last signal a lower high (This has always corrected itself, though the time it takes to correct it is usually several months)
Historically, the S&P does very well in October after a major downside in September.
Historically, October is known as the "Bear Market Killer", having ended more bear markets in October than any other, increasing those odds if it is an election year.
Lastly, I like to see how others are trading, and on DailyFX, they client base is 67% long, which means there is a lot of sentiment that we are going to head up for at least the immediate future.
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I'll end on this, if you're looking for my old stuff, I was unaware I couldn't record on a tab that had another trading software. I was reported and flagged for this. The Moderator that spoke with me was extremely kind and understanding that I didn't know this rule. However, I'm not going to be changing timeframes to show all the timeframes if I do a video because the chart goes kinda whacky when I do that, and I'm not going to spend time showing the Micros, other than tell you where they are at. It is just too time consuming doing my analysis and drawings on one software, to bring everything over. If you were referring to older material, I apologize for the inconvenience. Hope you still enjoy following along!
As always, trade safely and remember your risk management plan!
To see when the last time this occurred, we need to look at that rally that began in June and went into all of July. While you can't find my videos on this rally (more on that at the end), I had continued to say we were overbought in that rally and were beginning to rely solely on trends like the 2hr and below to guide us. While the 2hr is one of my favorite timeframes to utilize, it does not guide the momentum of the market by itself on a much longer-term basis. We had left the 3hr to 6hr uptrends in that rally behind at around 3900 to 4000, and after we got about 300-400 points ahead of ourselves, we had that major pullback that ultimately led to this descent we are currently on. Short term confirmation of this rally will be if price pushes above the 1Hr lower low Downtrend-Downtrending Line.
Once this rally begins, major levels I would look for would be;
3745, 3830, 3950, and 4037. The first three are major volume trading zones, and 4037 is a gap that I don't know we could push passed up into the next peak zone at this time even in a best-case scenario.
_______________________________________________________
Additionally, other reasons I feel confident going long are as follows;
MFI is Oversold significantly. The last time this year MFI was this oversold was 1/25/2022. A rally began afterwards.
The MACD Momentum Trend (close to MACD but slightly different) has hit the -100 level. We have had a rally every time this year when the MACD Momentum has reached this level.
I still don't like that the lower low Downtrend-Downtrending Line of the Daily (not shown on the current chart, may add) is higher in price action than the lower high Uptrend-Downtrending Line. This is an improper funnel.
There is only employment and manufacturing data this week, and unless something runs far outside expectations, I'm not sure any of it will cause a headline surge, so we are going to be trading on a more technical level rather than an emotional level this week.
Earnings season will begin here shortly, and historically, earnings seasons have been a rally time.
The Weekly is technically still in an uptrend with the last signal a lower high (This has always corrected itself, though the time it takes to correct it is usually several months)
Historically, the S&P does very well in October after a major downside in September.
Historically, October is known as the "Bear Market Killer", having ended more bear markets in October than any other, increasing those odds if it is an election year.
Lastly, I like to see how others are trading, and on DailyFX, they client base is 67% long, which means there is a lot of sentiment that we are going to head up for at least the immediate future.
________________________________________________________
I'll end on this, if you're looking for my old stuff, I was unaware I couldn't record on a tab that had another trading software. I was reported and flagged for this. The Moderator that spoke with me was extremely kind and understanding that I didn't know this rule. However, I'm not going to be changing timeframes to show all the timeframes if I do a video because the chart goes kinda whacky when I do that, and I'm not going to spend time showing the Micros, other than tell you where they are at. It is just too time consuming doing my analysis and drawings on one software, to bring everything over. If you were referring to older material, I apologize for the inconvenience. Hope you still enjoy following along!
As always, trade safely and remember your risk management plan!
Comment:
Mmmm sorry about the crammed pictures. I had it expanded more on my screen and everything fitting together nicely. I'll try to watch that in the future as I get used to just using this platform for the analysis.
Comment:
Since it is cutting off some of the Trend Box.. those are as follows;
Last Macro Trend Signal Spots
30m - 3643 Downtrend (9/30/2022) Lower Low
1Hr - 3685 Downtrend (9/29/2022) Lower Low
2Hr - 3650 Downtrend (9/29/2022) Lower Low
3Hr - 4031 Downtrend (9/13/2022) Lower Low
4Hr - 4038 Downtrend (9/13/2022) Lower Low
6Hr - 4001 Downtrend (9/13/2022) Lower Low
12Hr - 3956 Downtrend (9/13/2022) Lower Low
Daily - 4041 Downtrend (8/26/2022) Lower Low
Weekly - 4366 Downtrend (2/14/2022) Higher Low
Last Macro Trend Signal Spots
30m - 3643 Downtrend (9/30/2022) Lower Low
1Hr - 3685 Downtrend (9/29/2022) Lower Low
2Hr - 3650 Downtrend (9/29/2022) Lower Low
3Hr - 4031 Downtrend (9/13/2022) Lower Low
4Hr - 4038 Downtrend (9/13/2022) Lower Low
6Hr - 4001 Downtrend (9/13/2022) Lower Low
12Hr - 3956 Downtrend (9/13/2022) Lower Low
Daily - 4041 Downtrend (8/26/2022) Lower Low
Weekly - 4366 Downtrend (2/14/2022) Higher Low
Comment:
We've got a 30m Uptrend signal (lower low) forming right now, right at the 1Hr trending line drawn above.
Comment:
Uptrend formed at 3635. This is a Lower Low
Comment:
I've decided to cash out at the moment for a $2000 trade @ 3642. I'll consider getting back in on the open. While I'm long, I'd love to keep hitting low points and getting higher.
Comment:
My hope is with the open we get some whipsaw, then an attempt to pump things back down, get to that sub 3600 level again, and I'll be going long again for the day.
Comment:
Mmmm... Definitely should have gone in at 3618ish, the 15m was flagging that as a good in for another long, even if for a short term trade. Obviously I dripped out a bit early, although I would have had to be willing to run back from $2000 to $500 in hopes it went higher, and that would be poor risk management.
Overall, I still think things bounce back down to 3600 by the end of the day, or at least close to it, before finishing higher.
Overall, I still think things bounce back down to 3600 by the end of the day, or at least close to it, before finishing higher.
Comment:
So I've gone short instead. I still fully believe we end higher, I just see a mid day dip today. I'm not gonna hold it long, maybe 20 points worth. I'm in short at 3679. I'll bail for profit at 3659 or below if it pushes past strongly.
Comment:
We have an Uptrend on the 1hr at a lower high at 3668.
I'm not so sure it drops all the way back down to around 3600 today then. Maybe drop back to that 2hr Lower High Uptrend level at 3638ish. Finish the day there, dip overnight at 3600 or close to, then rally overall for the week until Friday when I'd like to see how the employment and wage data comes out. We do have JOLTs job data tomorrow also.
I'm not so sure it drops all the way back down to around 3600 today then. Maybe drop back to that 2hr Lower High Uptrend level at 3638ish. Finish the day there, dip overnight at 3600 or close to, then rally overall for the week until Friday when I'd like to see how the employment and wage data comes out. We do have JOLTs job data tomorrow also.
Comment:
Eh, I cashed it out here. Just under $1000.
Comment:
Mmmm... one more swing upward for the day I think, not sure we close at session highs. May short again for a short term trade, will decide if we hit back up at the highs again and how volume starts moving then.
Comment:
Went short at 3685
Comment:
2Hr Lower High Uptrend at 3707. At this point I'd look for a small move downward, maybe to 3640-3660, and see how the trends continue to turn over.
Comment:
Not sure we will maintain at this level until 16:00 EST, but if we do, we currently have a 3hr Uptrend mark. I didn't see where it came in at.
So we are starting to snag those trends if we are going to start a reversal pattern.
So we are starting to snag those trends if we are going to start a reversal pattern.
Comment:
Well, close a bit higher than I expected. Volume was decent for the day, that's for sure. I still think we drop down to about 3650 +\- 10 based on the math. I can't complain on a $3000 day being it is only Monday.
My gut says we drop down to 3590ish range once more still, but I honestly can't exactly explain why I think that'll happen so I'll be sticking to the math and not my gut. I guess I was looking for more volatility in the day to know this was a true turn around and start of the reversal. The 3hr Uptrend didn't hold, but if it pops up just a bit more and can hold over the next 3 hours, maybe we get that then.
My gut says we drop down to 3590ish range once more still, but I honestly can't exactly explain why I think that'll happen so I'll be sticking to the math and not my gut. I guess I was looking for more volatility in the day to know this was a true turn around and start of the reversal. The 3hr Uptrend didn't hold, but if it pops up just a bit more and can hold over the next 3 hours, maybe we get that then.