Hi Narly
I couldn't disagree with anything in your summation. I think you showed some insight.
You asked a question.
"Yes we are at a double bottom (???) BUT is it 100% certain that it will bounce from here. Please tell me why."I am heading out to dinner and games with the family soon. I have exercise classes early in the morning , so now is a good time to review my charts and get my head around what I am expecting in the coming weeks and develop a strategy. Hopefully I will provide some insight to your question along the way.
I am attempting total free carry of PLS. Partially sold three times around highs and rebought twice around lows. Not the highs , not the lows.
Anything under $4 would achieve free carry. Could have done that last week. At a lower price I can achieve free carry, but also pick up a trading parcel to play with on the way up.
I have an hour or so before we go out, so I am going to be thorough and long winded. Sorry, but It helps me organise my thoughts.
I am going to post three charts, hourly last, daily second and the weekly first. I think that the weekly and to some extent the daily may reveal somethings relating to your question.
Hourly chart (my last chart).
This week is almost a perfect replay of two weeks ago. With 10am opening hour attacks downwards (most likely by the rat pack) for 5 days in a row. The only difference is that on the last Friday two weeks ago, after the drop to 3.86 there was enormous buying pressure (springboard effect). It's absences was notable this week. If a double bottom was to be put in place then the start after reaching a low of 3.87 was the perfect opportunity.
This is the first hint that the rat pack didn't have a double bottom in their sights. Then the comes the discussion about a bounce next week covered in the daily charts.
Daily chart (my second chart).
Notice that the RSI(5), MACD & Stoch's are all negative. 40DMA and 10DMA are both falling.
Each of the daily candle this week have lower-highs and lower-lows for 5 days in a row, which only happens rarely. Usually this is the pre-emptor of a bounce. The US markets made a small gain this weekend, so a green daily candle bounce would not surprise me at all on Monday. It could follow on into Tuesday. The 10DMA is sitting at 4.08 and a bounce could even cut into that line. For this bounce to turn into a double bottom that trend needs to be continued well above the 10DMA later in the week. I have put green ellipses around past occurrences in this current downturn and also the previous downturn. Two in both downturns and they didn't last long.
I put some FIB's in this chart and you can see the bounce from the low 3.86 to 4.37 was about midway between the 23.6-38.2% FIB retrace upwards. So about a 33% bounce which is fairly common. The downward C-wave extentions if 3.86 fails to hold are interesting.
The slope of the 10DMA towards the end game of the last downward cycle was steep. In this current downturn it is currently not so steep. Yet ?
Weekly charts.(my first chart)
This has taken longer than I thought. So I will be brief as I have to go soon.
In answer to Narly question, Take a look at the green arrows at the lows of each cycle. The are all Doji's ( on daily charts I take some minor notice of them, but I don't day trade) . I do pay attention to them in weekly charts.
Next notice the red ellipses in the weeks prior to the Doji's. they are red candles, either two or three. We currently have one red weekly candle.
To me this suggests another few weeks to play out. Short game or long games.
I have placed a 40 week trend line on top of the current 40WMA. It looks like it will remain flat as it moves forward week by week. left end meeting rising candles, right meeting falling candles. So it looks like we will get a crossover of the 10WMA and the 40WMA. Examine the history of the past when this happens.
I use a number of other indicators as well ( not disclosing, trying not to encourage the copy cat, then faced with a barrage of questions) , suffice to say that they are also confirming that the end game is approaching. So I have set a target price associated with the timing. It will more than likely will only be in the area of the ultimate low, but it will be enough.
Lets see what sort of endgame script the rat pack have in mind and whether my approximations are good enough.
Just the way iI deal with the markets so that I am not surprised by what plays out. As always DYOR.
We shall see?
cheers Lies
(20min delay)