Swing trade #1
Prior analysis here (29/11)Interim update #3 here (18/01)
Taking a look at this week, we see continued evidence of long term trend change in progress. I remain very positive regarding the technical picture. Keep in mind, this is a long term picture for investors rather than a short term picture for traders. Traders will find it useful however, because one will generally always do best when trading in harmony with the larger trend.
Weekly
Looking at the weekly chart, it wasn't ideal to see the close at 0.105 under the 38.2% fib (0.1075). Major support sits at the mid 0.09x's with the 50% fib and the e21. The weekly e21 is strong and will likely be our new base, however I don't expect to see test it. The green w5 likes to 'dip' back down after crossing over a large ema. We saw it dip (week of 11/12) after crossing the yellow e21 and 23 are looking at it now after crossing above the cyan e55. These minor dips usually only last 1 bar (except when crossing the e200). I anticipate next week to be a positive week, the e55 should repulse the green w5 back upwards and put the e100(blue) in its cross-hairs, perhaps with the possibility of our first run at testing the strength of the 0.150 level. If one takes a look at the red candles, they would note they all wicks under them, indicating that buyers are taking advantage of the lows. The green candles generally don't have wicks under because the buyers were in full control. Some would be quick to point out that all the candles have large wicks on top, which shows that sellers are taking advantage of every opportunity. They would be right, but this is also expected as we are coming out of a 2yr bear run. These things take time to unwind as has been pointed out in prior analysis.
On the downside, it should be pointed out that we are currently at the beginning of an extremely strong bear continuation signal. Yes bear. The blue e100 has crossed under the red e200 and the green w5 has popped back and turned down. This is a very clear sell signal for my method, however this signal is one that would play out over many months and could easily run 50-100 points. We only have 10 points, so it just doesn't have the room. We are also in a decent fib swing trade and that is more likely to play out than any major bear move. In addition we don't chart in a perfect world, so what may look like a strong bear signal could actually be setting up for a massive bull signal by viewing the e100 as being repulsed upwards by the e200, which would likely have been the case without the retail portion of the CR. But it happened, and so we chart it just the same and keep an eye on it. Of course, as always, fundamentals- both company and macro - will take precedent.
Daily
Looking good here. Moving averages are slightly better than yesterday - you can see the e55 and e100 tick up again. The e21 has shallowed slightly and the w5 has begun its turn/bounce. However, to be very clear, we definitely do not want to see the green w5 drop below the blue e100. That's going to kick in some serious selling pressure again. What we want to see in the next 2 or 3 days is for a daily close back above the e21 and the green w4l5 turn upwards again. We barely made a bullish divergence, and while it will help out a bull move it is unlikely to make it happen on its own. My anticipation is to see a bit of a rally, tagging the 0.150 area in time with the blue e100 crossing over the red e200. This should trigger a sell off allowing the green w5 to make its turn down for the e100/e200 crossover.
We are right now at a very interesting part of the technical picture. I believe that Monday - Wednesday will set the scene for the next couple of weeks and I am certainly interested to see how things unfold. We are getting close to a significant bull run in my view however we are still working on turning those large period long term moving averages upward and that always takes longer than we want. Today's trade however may be the bounce we are looking for as we head into next week.
(20min delay)