Intraday:
Today we got a “thank god the hurricane wasn’t as bad as we thought” rally. After the initial jump we slowly drifted higher following a rather narrow channel taking us from lows of 1294 to a high of 1210. This 1210 level is an area of resistance we should watch very carefully, there are several things that can happen from here.
Daily:
The Di lines are moving closer together suggesting a bullish alignment but with the ADX still higher and turning downward we may see them bounce off each other. Although the MACD is in a bullish alignment it remains in oversold territory. And the stochastic is approaching overbought levels. Having hit overhead resistance at 1210 with mixed signals I still remain bearish. I believe that we will continue to see the formation of this pennant pattern or may advance a little more to form a bear flag. I believe the former is more likely than the later.
Having hit overhead resistance we now look to gap support/resistance. Often when there is a gap in price movements, that gap then becomes a support/resistance level when prices switch directions. We have seen two of these recently, one today (G2) and one about a week and a half ago (G1). Having hit this resistance level at 1210 we could push higher like I laid out last week when I talked about the double bottom swing trade bottoming pattern. Or we could reverse off of the 1210 area and continue to form the pennant pattern before breaking down like I posted at the end of last week and above. Or we could form a bear flag like I talked about above. I wish I could give you a better idea of where this is going but right now there are no clear signals to know for sure.
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