(Click On Charts To Enlarge)
It's interesting how the market often tells a story, if we can follow along. Yesterday's trading in the QLD, is an example.
Bearish Pattern #1: Bearish Rising Wedge - If we start at the morning low (arrow) of 24.34, we can see that a Bearish Rising Wedge formed (pattern in white). It broke down, and I shorted 25.18 on the retest. The downside expectation on a broken wedge is the low of the pattern, 24.34. The QLD printed 24.35 at 1:30PM. I thought about covering my short right there, not wanting to see an IN YOUR FACE afternoon rally (LOL), but decided to hold.
Bearish Pattern #2: Ascending Triangle (or, Inverse H&S, if you will)- The rally off 24.35 was a "possible" Double Bottom, so I decided to cover at 24.76 and take $1,000 profit and call it a day. Too bad. From 1:30 to 2:35PM, the pattern in yellow formed, then broke to the downside.
Bearish Pattern #3: Descending Triangle - The first two patterns are nested within this larger pattern (in red). The high was 25.54. The lows were 24.34 and 24.35.
25.54-24.35 (the more conservative of the lows) = 1.19 points of downside on a breakdown, so 24.35 - 1.19 points = target: 23.16 IN PLAY.
When nested patterns like this break down, the target has a better chance of getting MADE, and we can see that it looked like they "pulled the plug" at 3:00 PM when 24.34-24.35 support broke. The 23.16 target MADE at 3:25PM. The low was 22.98 at 3:40PM, after which a snapback rally to broken 24.34-24.35 ensued into the close.
3 comments:
Love reading your work and explanations. Thanks
Hi Melf,
Did you see the Wolf Wave on SPX? It was the overlapping waves that played out Tuesday thru early yesterday. The trendline connecting waves 1 and 4 marked the exact bottom of the spx so far this morning. we've had a bounce from there, likely to break that line later today, but it was very cool to see how that trendline marked the point where spx reversed (even if for only a short time).
Greg
Thanks very much, Mark.
------------
Greg,
I see what you mean. I was looking at that, too, but the Lead-In to Wave 1 didn't look right. It should be a stronger directional move than that one, I think. But, then, "use what woiks, huh?!"
Have a great weekend, guys!
Post a Comment