So, Friday gave us an emotion-charged rally. Momentum still continues to waiver. I mentioned on Thursday how the slow line in the following 60-min chart went negative. Well, it has recovered to go positive but notice how tired that slow line looks.
So, price gaped up to previous highs (corresponding with my resistance pivot and retraced back towards the 20-ema before heading higher on the day. Some things to notice in the following 5-min chart include:
-The gap up sold off into a bear flag pattern that concluded it's measured move in an nr7 hammer candle (purple candlestick).
-Price put in a higher low, while momentum dragged down into a lower low as price ever so slightly tagged the 20-ema continuing higher in a suspected "Slingshot" setup.
- Price shifted from bullish to bearish around the 11 a.m. hour (Pacific Time). The shift is suspect once price closed under the 20-ema and the fast line can't recover the slow line on the 3/10 macd. Notice inside the ellipse on the chart below, how the fast line crosses under the slow line, corrects back into it, but just can't recover above that slow line. Momentum and price then continue lower.The momentum shift I just mentioned using the 3/10 macd could also have been witnessed in the TICK behavior. In the chart below we see how the zero line was acting as support along the highs of the day, but once price closed under it's 20-ema the zero-line was now acting as resistance. Also worth noting during the early hours how steep the pullbacks in TICK were. Typically on solid trend days you'll see TICK pull back to the zer0-line on corrective moves, not all the way down to -600 and a nearly -800 reading.
Well, the sell-off brought price back down to previous "single print" levels.OK, this rally has reached an apex, right?! There's zero upside momentum left on the daily.
So far the weekly 38.2% Fib. retracement level has held as resistance. A gap-fill and 50% retracement would be the ultimate victory in the next few months though.
The setups I include on this blog are used in conjunction with the 3/10macd and the criteria I ascribe to it as a way to alert me to an existing condition of price. The key concept to take away from this blog is that I try to anticipate what will happen on the higher time frame by using a faster time frame to trigger the trade setup. I do not trade a "system" I use two indicators to clue me in to price conditions. Please read the Disclaimer located in the sidebar of this site. I can be contacted via email at firstname.lastname@example.org
I am always open to questions, comments, or suggestions on how to improve this blog.