mkay... so the last few posts have been are we turning are we not, maybe, Yes, no, could go higher and make double top, could bounce off the daily 21 moving average, reject the 13 blah blah blah...
Stepping back, this sugggests uncertainty is showing in the market and that uncertainty will be reflecteed by volatility... and we sure got that in spades in the last few trading days.
Soo... beginning of new week... time to ask the charts some stories again....
Weekly
Well according to this little black duck the signals for a turn are coming in thick and fast.
Note, these signals are for a turn or correction on the weekly timespan, so one must consider how much time that will actually involve.
Marked divergence has already occurred in the MACD histograms.
Looking at the chart, the most important factor at this stage is what appears to be divergence occurring in the MACD moving averages.. and added to this is that the signal line (blue) has rejected (just) the flat to down sloping slow line... this could be a sign of failure to resume up trend and further weakness to ensue.
My theory regarding turn signals based on the MACD "sub indicators" and relevant moving averages on price goes thus:
Signals: First Divergence between price and the MACD histograms Second: Divergence between price and the MACD moving averages
Third Pierce and hold above/below the 21 period moving average.
Caveats... for a "safe" or "strong turn as opposed to correction in existing trend, the MACD moving averages should be at a level equivalent to the opposite turn signal on the same time span
Two attempts at the MACD moving averages should already have been made in the current trend, with the third suggesting a stronger chance of continuation of price after the third pierce.
So... looking at the Weekly chart objectively with this in mind...
We have turn signal One and the possibility of turn signal Two
Price in the current uptrend has made two attempts at the 21 period moving average.
However we still have a final caveat in the turn/correction debate
Whether the Moving averages are at the appropriate extreme though is still very much in question... if one looks at where the previous turn occurred, that is, in the march lows, the MACD moving averages were at a level of -450 odd.
Their highest level so far in this uptrend has ony been +240... This creates a conundrum... which cannot be borne out by the data on this chart, namely is the previous level of -450 in reponse to a prior extreme and turn signal on this time span, which would have occurred based on data leading up to the 2007 top, or is that level relevant to now, that is, should the MACD moving averages be up another 200 points or so before a strong/good conservative turn is more likely?
Unknown, Dammit.
Further Stuff
I mentioned last week about Elliot Waves and the potential that the trend DOWN is a 5 wave sequence.
I've added the potential wave counts to the weekly chart, waves marked by thick blue on Price... Potential counts marked as large Red Numbers:
The important point to note here is that according to elliot wave theory, Wave 4 MUST respect the area marked out by wave 2... that is, in this case the weekly price must not close and hold above the thick horizontal line in the chart at the left.
'Tis interesting here also that said thick red line is just above the Fibbonacci 50% retrace of the 2007-2008 drop...
An important level, and as conjecurised (nice word!) last week, after price hitting this level overnight, suspicions that the first test of this level would see a rejection were borne out Note though that the same thing occurred at the 23% and 32% levels. first test saw a rejection... but price eventually broke back through...
Annnd Finally, I still have a histogram based upside target around the 5400 mark... this is in retrospect possibly a little hopeful... however, this targetting still gives a level smewhere ABOVE the 5000 mark...
As stated before though, have not really applied the targetting to such a large timespan before so possibilties that it is not fine enough to say we must go higher have to be considered.
Moving Averages and trendlines
we have an interesting convergance of the 13 period moving average the 21 period moving average and a trendline occurring on this timespan. All of these areas are around the 4700 mark.
Conclusiony Bits for this timespan:
Critical time as per usual... this is the most "toppy" that this trend has been since the March lows commenced.
Eventual Weight to the downside seems appropriate... with a target towards the 4700 area.
The lower timespans.. daily and intraday will need to be asked next to see what they have to tell.
But on that point... we are currently bouncing off the 21 period moving average on price on the daily... expectations that this level is critical...
(20min delay)