FAZ: Still In Freefall

From Wednesday morning pre-market on the FAZ:

"It momentarily bounced off the 63.79-62.90 gap fill (yellow horizontal lines), but that didn't hold either, so it's still in freefall to the downside. These 3X ETFs are wild and wooly. A bounce could come from anywhere, but the unfilled gap (horizontal green lines) from 56.46-54.15 looks like a reasonable possibility on any further strength in the financials."

The SPX futures turned around to the upside before the open Wednesday morning, and the FAZ was indicated to gap down right at that 56.46-54.15 gap, but it didn't provide support.

On Wednesday, the FAZ tried to find its footing and traded in this Symmetrical Triangle. These patterns tend to resolve in the direction of the trend, which was a very strong downtrend. The height of the pattern suggested 9 points of downside, so when it broke down yesterday morning, that put a target of roughly 43.75 IN PLAY.

On the break, the FAZ went into freefall again and the target got MADE and exceeded on the downside, breaking the February 26 low of 47.06 in the process (that's the bottom of the Bullish Inverse H&S in the first chart). The FAZ remains in freefall here.

As we discussed on Wednesday morning, these 3X funds are wild and wooly. It's especially important that good risk management be employed when playing them.