Play by play friday

5 Min:

                We started the day of with initial optimism bolstering an hour long rise which eventually formed a bearish rising wedge pattern.  We broke down out of this and formed a relatively narrow channel leading us farther and farther down.   Out of this channel we formed a flag pattern which ended up playing out as a bear flag pointing to farther downside pressure.  We began to level out around noon as American traders waited for European markets to close and settle forming a wedge or “coil” pattern (these require close attention to trade properly as they can break in either direction).  Towards the end of this coil we saw a bearish alignment of the 10,20, and 50 period moving averages indicating a breakdown of the pattern. 

                After the breakdown of the wedge pattern we fell into another bear channel falling somewhat steadily for the rest of the day.  However, at about 3:15 we attempted to break out of this bear channel and rally back up.  The attempted break out failed within the last 10 minutes of trading putting us down for the day with a poor outlook for Monday.

Daily:

                In the daily time frame we saw further broadening of the ADX, another downtick on the MACD histogram with the fast and slow lines failing to cross, and the stochastic moving even further down.  All of our indicators ended us in a bear channel leaving us down for the day.  From here I advise extreme caution.  We put in a potential reversal pattern in the form of another hammer closing very close to the 1120 support level.  From here we could confirm a short term reversal and rally once again, or we could not get confirmation and push below the 1120 area.  If we break below the 1120 area we may end up seeing capitulation and end much, much further down. 

Weekly:

                We closed out the week with conflicting data on our indicators.  The ADX and Di lines are currently trying to move to a bullish alignment (probably from the attempted rally).  The MACD histogram and stochastic moved even further into bear territory.   With one of the three indicators showing mixed signals we look to the moving averages and see that the 10 week moved below the 50 week with the 20 week not far behind.  With the lack of confirmation and multiple indicators pointing down you can probably expect to drop even more over next week ending near one of the support levels we formed last year.