The 7 Apr week analysis should be music to bear’s ears. Has the bear move ended? Let’s see the charts for clues.
Monthly chart (which helps project the longer term perspective of the market trend – chart as shown above), both Dow and S&P are still in the red. Is there room for deeper down move? RSI is at a pivot point. Should it give way, bears are still in charge. For that to happen, let’s study the strength of the bears in the shorter time frames as indicators to what the bears can do in the coming week.
Weekly chart (which helps to project the mid term perspective of the market trend – as shown above) continue with downward movement after its false upside breakout on week ending 4 Apr. Now sitting on a soft support. So the question is will it hold? Let’s look at daily chart for insights.
Daily chart (which helps to project the short term perspective of the market trend – as shown above) break its previous low. The downward movement kind of resembles the one in late Jan 2014 in terms of its volatility and the strength of the bears. Thus increases the possibility that S&P could break below 1800. However, market doesn’t necessarily go down in one straight line. At its present oversold state, a relief rally is likely.
VIX (Fear index) mid-term has reached 1st level of resistance. I would love for it to hit $21 – $22 range where it poise as a major resistance level, a more likely level that would drain the bears out. Short term price is in overbought zone at the moment. I expect the bulls’ resistance in the near term.
Long term (monthly chart):
Pivot point. Bears looking to breach the uptrend.
Mid term (weekly chart):
Just turned down. Soft support must hold for bulls to take charge.
Short term (daily chart):
Down. A lot of room to go down further. But bulls’ resistance expected in the near term to cool off oversold condition. If it fails to hold the fort, my safety net is near slightly below 1800 of S&P.
In short, i expect a relief rally to happen and would treat it like a rally from a downtrend till the tide says otherwise again.
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NOTE: All information provided “as is” for informational purposes only, not intended for trading purposes or advice.