From this morning on the FAZ:
"If the FAZ breaks 38.00 by very much, it once again will be in freefall to the downside."
The two H&S Top targets of 39.06 and 39.00 and the Symmetrical Triangle target of 37.97 got MADE at the open. After a weak, failed rally to fill the opening gap, the FAZ formed two more patterns, both of which broke to the downside.
The first pattern is a Bearish Rising Wedge. Notice that #5 was a third "hit" to the lower trandline. That's called a trendline validation. When a validated trendline gets broken, it tends to have some significance. The breakdown put a target of 35.58 IN PLAY.
The second pattern is a Descending Triangle, the lows of which were 36.90 and 36.88. The target for the Descending triangle was 36.01. On the rally after the breakdown, the FAZ failed at 36.88, the exact low of the pattern. Remember at the weekend, we said that retests of pattern breakdowns are common, and are to be expected. This was a failed retest, which is a good place to enter a trade short. Cover when the target gets MADE. In this case, there was a lower target IN PLAY, so that's fine to hang in there for that target, or to cover "some" on the way down.
I won't do the math for these targets, but if any of you don't know how to calculate them, just ask.
Both the 36.01 and the 35.88 targets got MADE. Remember how much we've talked about the potential move when there are nested patterns, or multiple patterns. FIVE targets have gotten MADE in under 3 hours:
1. H&S Top: 39.06
2. H&S Top: 39.00 (the back-to-back H&S Tops in Friday's chart)
3. Symmetrical Triangle: 37.97
4. Descending Triangle: 36.01
5. Bearish Rising Wedge: 35.58
9 comments:
Thanks Melf,
Your FAZ analysis is helping me with my SKF trades. :)
That's great, jegejig. Good luck, buddy!
Melf, thanks for your analysis. Question, how did you calculate your $35.88 target? thanks
Melf,
You may scold me this but I'm long SKF for potential scalps because the daily chart's angle of attack is looking quite steep already.
So far, took profit/cut my loss on my second buy for the day on SKF. :)
If SKF continues to go lower (referring to your FAZ analyis that looks like it's going to make an intraday lower low),I have a sell order on my UYG (I have UYG for hedge).
Alphahorn,
The target was 35.58, not 35.88. I typed it correctly in the body of the post, but made a typo at the bottom, and put 35.88. I corrected it. Thanks for catching that.
38.74 - High of the Wedge
36.62 - Low of the Wedge
38.74 - 36.62 = 2.12 points of downside on a breakdown, so subtract that from the point of the breakdown.
The pattern broke down at "roughly" 37.70, within a penny or two. It's difficult to read exactly where the trendline was on these Scottrade charts, but 36.70 is real close.
37.70 - 2.12 = Target: 35.58 IN PLAY.
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jegejig,
Scold you for playing the SKF against the trend? Now, would I ever do that? LOL.
thanks Melf I enjoy your analysis
Melf what's your take on FAZ's bullish charge post 2pm with regard your analysis, and your 5 key bearish markers? This would be invaluable in my understanding your analysis re turning points.
Faz closed at 42, r u still bearish on faz?
rrman, hotbutton and DJ,
I'll post on the FAZ in few minutes. Thanks for your comments.
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