Last Wednesday the NASDAQ gave us a Bearish Engulfing pattern. The low on that day was 1949.50 and remains the trigger point for further losses if breached. Friday saw us take a look down here with a low of 1951 but the Bulls managed to recover to close a fraction below where we started the day. There is some resilience being shown here but we are still concerned that a correction could be underway. This is reinforced by the Bearish Harami completed on the weekly chart last Friday.
Indicators in Play
A Bearish Engulfing pattern occurs in an uptrend and is formed when the market opens above the previous candles green bodied close and ends the day below that candles open.
A Bearish Harami is a reversal signal at the top of a move consisting of two candles. The first is a decent size green candle and the second is a smaller candle, either red or green that has a body within the body of candle one as demonstrated on the weekly chart to our right.
Summary
The Bulls are hanging in there and putting up a fight but there are Bear pressures evident all the time we are posting closes below our Marabuzo line at 1980.50. A print below 1949.50 would be the trigger for a further pullback with our 38.2 Fibonacci Retracement at 1878.75 as the target.
David has been
analyzing and trading the worlds financial markets for the past 25 years. After an initial grounding with Mercury Asset Management and Warburg Securities he went on to set up his own brokerage operation in London. Since then he has appeared regularly on Bloomberg Television and been involved in providing analytics on behalf of some of the worlds major exchanges. He is also a member of the Society of Technical Analysts.
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