As discussed last week, bulls had the bears nailed. Every pull backs were buying opportunities. Hope you too had taken advantage. However, if you are in the market, guess the burning question might be will last week’s bullish performance repeat itself again this week?
Monthly chart (which helps project the longer term perspective of the market trend – not shown today) shows the uptrend is still intact. Nothing overly bearish. Not deeply overbought yet.
Weekly chart (which helps to project the mid term perspective of the market trend – as shown above), prices is in the middle of its envelop telling us that it is not overly value from last week’s rally. If the market wants to go up further, more room to run before it hits overbought condition. Moving average shows the trend as turned from down to up. But beware of bear trap as the moving average could cross back down again easily turning the tides again. Until it does that, the benefit of doubt favours the bulls.
Daily chart (which helps to project the short term perspective of the market trend – as shown above) shows in the shorter time frame, the market is overbought. Price is at the top of its envelop and RSI is way overbought. Based on the behaviour of the last one year, for prices to go higher when prices are in such overbought condition, it will pause for a while to cool off from overbought condition, or pulls back before going higher. That’s a risk we need to take into consideration for your position size (if you wish to enter into the market this week) and profit take decision (if you have already bought).
VIX (Fear index) mid-term price not very oversold yet. VIX Short term price very oversold. It may paused for a while and struggle to retest $14 range.
Summary:
Long term (monthly chart):
UP
Mid term (weekly chart):
UP
Short term (daily chart):
UP
When all three timeframes are UP. Something has got to give. Perhaps, begins with the shorter time frame. With ST Vix and ST daily perspective looking in their extreme with bears wanting to go down and bulls refusing to give way, I suspect this week prices to be flat but volatile.
Cheers
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NOTE: All information provided “as is” for informational purposes only, not intended for trading purposes or advice.
