Intraday:
We started off the day by broadening the bear channel from yesterday led lower by, what else, European concerns. We continued in this bear channel for most of the day until news that Italy has approached a Chinese mutual fund for assistance, not the Chinese government but a mutual fund. Regardless of whether this goes through, ultimately the quantities talked about will ultimately have no effect on the issues in that region. We continue to see the irrational trading strategy of “buy the news and sell the facts”.
Daily:
Today, we ultimately failed to get the break of our bear flag pattern today with a potential reversal in the form of a hammer candlestick. Having confirmed a lower high and a potential lower low that could complete sub wave 1 of my wave 3 we can expect to see a short lived rally. This short rally will likely go up to either the 10 or the 20 day EMA (exponential moving average) before confirming another lower high and reversing to begin sub wave 3 of wave 3. This is not to say that we could fail to get this rally considering that all of our indicators are still showing bearish signals and that we closed at a Fibonacci retracement level.
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