The magical question everyone is asking is the selling over? Last week has a huge week for all the markets. No matter what the government did, the market kept on selling. Friday close was very interesting. The market made a move upwards toward the last hour after consolidating throughout the middle day. The market did not close at the high but we did not close at the low either.
Below are the monthly,weekly, and daily charts. We have drawn the major support/resistance lines for all three markets. Due to the volatility, it hard to trade the daily at this time. Therefore, we are going to look at the weekly Ichimoku chart. For both the weekly and now the monthly, we are in a bearish sentiment. The last time the monthly charts were bearish was back in 2002.
We know that the long term “picture” is bearish so we trade any daily chart bullish, it has to be very short term. Some people don’t like to trade against the trend. If that is the chase, you are waiting for a bearish setup on a daily chart. Notice, I said “waiting”. I said waiting because if you don’t have a short position on at this time, it is very dangerous to go short right now. The markets are in a very very oversold position. At some point, some profit taking will take place and the market will go higher. The move last week was a steep move down so we may get a very sharp hard move up. Also, it is option expiration week this week.
If you are a short term player, you are looking for a bullish trade on a daily chart because the weekly charts are showing that price is very far away from the tenkan sen. Either price will come and meet the Tenkan Sen or Tenkan sen will need to go meet price.
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