The Big Boys are coming back. The holidays brought some nice pops and ended with a nice drop.
News have been laying it on thick and if you’re not prepared then get prepared. Look for the true trend and don’t get caught.
Consolidation does 2 things.
1. It produces a strong support/resistance within the range it is trading.
2. Most people think the market is trying to decide which way to go. But the error is, it has already decided.
So where do you look? Longer term of course.
If we lose 1103, look for 1098.75 ish and we break that, 1089.25-75. Further bearish notes to 1078 and then a stronger support at 1067 (green line).
A pop up may kick us up to 1136.25. Apparently my chart is off. This should be 1133.00. The candle from which I got this level is actually incorrect.
Lets take a look at your daily charts and look at the hurdles for each scenarios.
Since early Nov, we’ve been trading between 1096 and 1108.75. Not until Dec 22, did we close above this range that facilitated the pop up to 1028.50. On lower volume. Another pop may bring us back up to 1133.00, but that is the yellow line in the snow. A break to 1033.00, conceivably engineer a technical pop to analyst expectations only to hit another level at 1135.75 then a stronger 1142.75. We are at a crucial point where we can see a correction now or wait for later date. Monthly charts, targets a potential correction back to 1055 (correction 1058ish and then 1038.75).
What does all the consolidations potentially do?
If we do pop this up and avoid a correction now. A correction later potentially stops at current resistance.
A drop now is more interesting.
A drop now allows daily charts to reset and enabling a stronger push up. The current supports still do not match longer term resistance and so will be a breeze to blow through. How? They didn’t really strengthen longer term s/r’s they made intermediate levels through the consolidations. A buffer zone.
Looking at the weekly, a distribution is evident. Is it a strong distribution? Not quite. The monthly outlook has not given way to it just yet. Does that preclude a correction? No. Some may say, there is a bear wedge there. Yes but the monthly will allow it to ride the bottom of the lower bear wedge line and fail it longer term. It doesn’t mean we wont see 1055. Can we argue that the bear wedge worked if we hit 1055? Technically, the wedge is successful if it hits 874.75-865.50 in this case. Technically feasible? Yes. Will it happen overnight? Not likely. Remember we are talking about weekly and monthly timeframes. If a distribution in the 4hr timeframe takes 3 weeks to actually allow the bears to do their thing. How long will it take in the weekly/monthly timeframe?
Keep an eye on financials.