Selling rallies is still the order of the day with lower highs and lower lows on each swing. It must be said that the last bounce was more aggressive but perhaps this should have been expected as this took place after visiting a major support. The big question now is do the Bears have the conviction to get us back for a test of 193.34 or not. A sign that things are not going to plan would be a breach of our intra day resistance at 196.83 as shown on our smaller 60 minute chart. The major upside levels that would really change things is our last high failure at 198.55.
Indicators in Play
Charles Dow defined a bear market as a series of declining peaks and troughs. The opposite applies for a bull trend.
Day traders often go down through the time frames to find intra day resistance and support that do not show up on their daily charts. This can give good entry levels to add to a position or warn that the picture is changing. This works just as well going up to weekly charts to keep focus on the bigger picture.
Summary
We are happy to be short with a stop above 198.55. If you are not already this way round then the boat may have been missed on a risk reward basis as we are now in the middle of the two major levels. A breach of 193.34 is a massive level with long term implications if breached. There is a lot to do before we can think of testing this again yet though.
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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