Daily 21 Jan
Currently sitting at 36.5 which is 38% retrace of the prev move from 22.5 to 45.5.
The Stochastics have finally started to come down & the MACD & Histogram are doing the same.
The divergences are being resolved now & no longer relevant.
Initial support is around 35 – 36.5 then down around 34 with the potential to reach 32.
Resistance is 38 up to 40
The daily net volumes during the week were consistently net selling except for Thu. Fri again saw a sharp rise in selling maybe signaling a deeper sell off.
The daily shorts were choppy with Mon having a sharp increase in open positions & a large number that were not reported if the data is to be believed. There were 940,181 reported for the week to Thu.
New open positions for Mon were 710,053, daily reported shorts were 23,600 were did the other 688,153 come from?
That seems to be a regular occurrence recently & one wonders then just how much unreported shorting is actually going on daily to impact the sp.
This pull back has been signalled for some time across all the time frames & should not have surprised anyone & it may not be over with yet.
This is the first test of the breakout point at 34 & may dip back into the prev range first before the next leg up starts.
My outlook remains the same & I still have a 48 target for Jan.
Weekly
Well, that’s a scary looking candle but it looks a bit overdone to me & I would expect to see support hold & a consolidation in the 34 – 46 range but it could go lower if the pro’s want it to.
Support 36.5 initially then down to 34 & potentially down to 32.
Resistance initially 37 – 38 then 40 - 42
The trend is up & the retracement looks scary but is normal & will be over soon.
The weeks vol was 78,701,673 & of that -12,802,564 (16%) was net selling & 6.5% of that was shorts.
While the downside potential might seem scary it is not.
This pullback was always going to happen. How much it does we will soon find out.
Imo. we are just retesting the breakout point from the prev range of 21 – 34 which is the 50% Fib level.
The prev divergences that were noted last week have started to resolve & are of no concern now.
The time to to take advantage of those passed.
Now is the time to plan for the next rally or better still just sit back, watch & wait.
Monthly
A quick look at the monthly chart & its clear that 36.5 is resistance at this time.
The large upper wick shows rejection of the higher sp & the candle is bearish looking but there is still 6 days to go.
Apart from the Stochastic being in the overbought zone there are not really any negative aspects on the chart.
The volume is higher than the prev bar & so far is
218,810,578.
Net vol though is -5,910,390 (2.7%) is selling.
If we finish the month with that candle pattern staying the same then it would seem that a period of consolidation may take place & my target of 48 won’t be achieved but that is still my expectation atm.
The trend is up & looks strong so far & just needs a push to continue.
Still looking good.
