SP500 at a critical area.
Monthly right shoulder re-test from above.
Monthly right shoulder re-test from above.
Simplicity in TA
- Thread starter Xspurt
- Start date
The 3 day bear pressure continued as expected but I just want to highlight one of the great things about TA which is, it can warn you of a whippy chop zone just ahead.
If you look at the attached chart you will see that the prior moves have been pretty free of chop whereas this week saw some of the biggest daily whips since the Oct lows.
We started off the week with the 2 candles on the trend line showing Monday's whip and then the break down just moved into more whips.
TA not only predicts the moves, but it predicts the type of PA and that works in any TF. If you didn't have the tools to trade whips then you hold short, but if you can trade lower timeframes, chop often offers great trades.
Some traders say the 1m chart is all noise but chop happens in every timeframe. The bigger view tells the direction and the lower TF gives the trades.
Having a heads up on what PA is coming allows the trader to change their trading style and/or TF to maximise profits instead of either being a victim of chop or sitting out the congestion while others load up.
As expected the 3Day Chart down pressure over ran the daily and bossed the weeks action down. On Monday the Dow staged a rally attempt and at one stage looked strong but was overwhelmed and dropped into an even bigger chop zone again as expected.
This is when I was expecting the weekly upswing to kick in and if this fails, and I expect it will, then the monthly will kick for the real move down. If the weekly upswing breaks the highs then it will require a review because this is the real war zone we are in now.
The question at the moment is, are we in a sideways consolidation making a base for new highs, or are we in the bear move down? I was expecting the daily up cycle to be overcome by the 3 Day down cycle and the push up failed and the move down continued. Then I was expecting the weekly to challenge the current move down which is around where we are now, and if we get that push up then a failure will show that the monthly is boss for a huge move down.
So I have 4 stages: Daily > 3Day > Weekly > Monthly. The 1st two are just about complete.
Usually the w/e is a great place to get the view for the week ahead but not always and this is one of those w/e's when I need another day or two. As I have said before, it is difficult to get the time to do intraday or intra week updates so I might not post until next w/e.
There is a Volume Test on the daily that is not yet complete and I want that to help out with the signal. As it is we are short and there is no buy signal yet.
The 4Hr chart is poised for a push down but it is a weaker chart than daily and over the w/e is vulnerable (I use is on market open to help work out the intraday pressure). There isn't a lot of space for downside action to the 12,700 level and a break of that would be very negative and would allow the monthly chart to do to the weekly what the 3 Day did to the daily.
We are in a buy zone and as it stands now, over the top of the last green tail will most likely be a buy. This is not so much a certain whippy zone as a potential bouncy zone between the baseline and the broken trend line. Whippy had one day reversals with big tails while bouncy has several days swings.
SUMMARY
Still short and in the Buy zone but the volume test is not complete. A break of the support line will be very negative. Holding this base will set up the weekly swing and that is the one that may well determine how 2012 pans out.
Good question. Sometimes it just simple TA such as the break of the last trend line usually has a backtest and the current base level gives the opportunity to set it up.
My reasoning for expecting the chop zone was conflicting time cycles. It was Gann that caught my imagination on how time is the key to trading. Here's a quote from Jim Sinclair http://www.futuresmag.com/2012/05/01/jim-sinclair-has-something-to-say?ref=hp&page=2
FM: The bear market in gold that began after the 1980 peak lasted 20 years. Where are we in the lifespan of the current bull market?
JS: My first prediction was 15 years, so I was wrong, it lasted 20 years. Right now, in Gann terms, we are at the beginning of the fifth wave. I would say in terms of time, the first possible period for maximizing a price on gold is early 2015. [Currently the market] simply might be the same as when gold went over $1,000 the first time and went back down to $750-$800. That was a shift in Gann terms; we may be in a similar shift right now.
FM: Gann?
JS: I am primarily a fundamentalist, but I have a tremendous respect for timing and timing is technical.
xspurt,
Thanks for sharing your time and knowledge.
This cycle website may be of interest to you.
http://timeandcycles.blogspot.com/
I do not subscribe to his paid service but i do find his free work interesting.
Good trading to you !
Thanks for sharing your time and knowledge.
This cycle website may be of interest to you.
http://timeandcycles.blogspot.com/
I do not subscribe to his paid service but i do find his free work interesting.
Good trading to you !
Bear party probably ends here or pauses.
Quite the significant support area diagonal support like this dictates market trends.
In fact, the area is strong enough to take market to new highs if enough patience is obtained. You got a retest of the old now broken downtrending line plus a retest of the old head and shoulder's right shoulder, so the confluence is there.
However....
Just dont let the main downtrending line become resistance once again.
This whole area will dictate the upcoming market months.
If the downtrending line becomes resistance, we get ourselves a downtrending head and shoulders, but if it finds support here new highs.
Pretty clear, just let one of the two happen and it will be a smooth ride up or down no need to complicate it, keep it very simple.
Quite the significant support area diagonal support like this dictates market trends.
In fact, the area is strong enough to take market to new highs if enough patience is obtained. You got a retest of the old now broken downtrending line plus a retest of the old head and shoulder's right shoulder, so the confluence is there.
However....
Just dont let the main downtrending line become resistance once again.
This whole area will dictate the upcoming market months.
If the downtrending line becomes resistance, we get ourselves a downtrending head and shoulders, but if it finds support here new highs.
Pretty clear, just let one of the two happen and it will be a smooth ride up or down no need to complicate it, keep it very simple.