Yesterday’s indecision was turned into decisive action in today’s markets as poor economic U.S. data and euro zone worries pushed us back down. We started the day off with a massive selloff at the open and never really made an attempt to rally back. This is eerily close to my daily chart from yesterday’s close.
We got confirmation of a hammer we formed two days ago today marking the end of this rally attempt. The Di lines on the ADX are beginning to broaden once again hinting to further selling ahead. Our MACD lines turned downward with the histogram putting in a downtick pointing towards a larger valley to carve out. And the stochastic fast crossed over turning at the 50 line. Everything, short term and long term are now bearish. I didn’t think it would play out like this.
After the initial selloff we began trading in a range between the 23% and the 50% Fibonacci retracement lines on the 15 minute chart. Being below the 23% line I believe that we will go down at least to the 1130 level tomorrow. Further on we will be watching levels of support, the closest of which is at the 1120 area. If we move back down to the 1120 area (not unthinkable considering we had over a 50 point drop today) and manage to push through it you should start looking for capitulation to come into the market and possibly moving back to the 2009 lows.
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