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Lawrence's Comment Recap The wildest swings within a week in US stock market history. Closed the week above Y-1. Outlook The waterfall selloff is now completed and that the first leg of this ...READ MORELawrence's Comment Recap Bullish target above Y+1 tagged in the beginning of the week as expected. Then the surprise part was a quick run down breaking Y-1 in one go. That ...READ MORELawrence's Comment Recap Gap below previous week low and started a mini crash to not just our closest 12800 (Y-2) target. It also tagged Y-3 quickly. That kind of moves ...READ MOREPart of Art of Chart Reading Summary Three Pushes is one of the more reliable chart patterns that work very well across almost all financial instruments. The pattern is easily ...READ MORELawrence's Comment Recap Not only Dow fulfilled our upside target of 12000 mentioned last week, it actually completed 100% absolute range expansion before stalling. Closed the week near the high of ...READ MORESpike and ledge first target reached. As long as the baseline of the spike and ledge acts as resistance, the next target below is in play.READ MORELawrence's Comment Recap Dow dropped to Y-0 early in the week. Since then it has trouble getting back up to previous week close. Bear flag actions led to further downside actions with ...READ MOREZerohedge reported how an absolutely orderly market being manipulated at the highest level in favour of some participants. This Selling Will Not Stand, Man: NYSE To Bust 17 Minutes ...READ MOREDow 30 Aug 15 to Aug 19 OutlookDow 30 Jun 06 to Jun 10 OutlookDow 30 Apr 16 to Apr 20 OutlookThree PushesDow 30 Oct 31 to Nov 04 OutlookDow 30 Apr 30 to May 04 OutlookGold Reached First Downside TargetDow 30 Aug 10 to Aug 14 OutlookKicking It Up A Notch In Managed MarketDow 30 Jan 25 to Jan 29 Outlook
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Where is Dow Heading According to Basic Chart Patterns and STOPD?
Sometimes it is better to look at the big picture from afar to gain better perspective. Here is the weekly chart of Dow Jones Industrial Average.
FOMC Week Tendency
The blue arrows mark the week for which we have FOMC meetings and announcements.
Do you know that historically it is very likely within 2 meetings after each announcement that both the week high and week low are tagged?
The meeting back in March has its week high tagged, but not the week low (highlighted by red zone). It is now the potential downside target.
Basic Chart Patterns
Measured up move off 2015 year low (marked by the 2 red lines), weekly consolidation or pullback is due after the upside target was tagged.
Trend line breakout (the upper orange line) being tested from above at this April FOMC week. Failing to hold that we get trend line false breakout with previous year close (highlight by yellow zone) the next downside target.
STOPD Patterns
Dow tested previous quarter high and failed to hold above on weekly closing basis, going back down to previous year close (yellow zone) and previous quarter / year midpoint (middle blue line) is in play. How it gets there does not matter. What matters is that the dynamics will very likely nudge the market to complete the biases.
End Notes
There are more to understanding charts the right way. One important rule is that price levels from higher timeframes are more important than the lower timeframes. Another important rule is that STOPD levels from higher timeframes often dictate the moves in non-serial matter hence very difficult to notice until you keep track of them as part of your routine chart reading. Knowing where we stand in terms of weekly context can help us handle day-in day-out trading with much better clarity and confidence.
My premium members got the special update knowing a swing top is in within a day. That is based on custom market breadth models which can help us refine the timing and knowing the magnitude of the pullback. It is a very powerful tool but we still need solid chart reading skill to manage our trades properly.
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