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The US markets may have just signalled the top.


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A wild swing in the US indices overnight may be the tipping point for the bulls.

From the outstanding ADP employment numbers early in the session lifting the DOW from yesterdays close a massive 282 points to the intraday high and followed by commentary from the Fed wanting to start unwinding the $4.5 trillion balance sheet, within hours the indice had finished 41 points in the red. The S&P500 followed the same pattern.

This type of violent swing can be the longer term defining point for the bulls, as all long positions taken during the session get closed out or sit as unrealised losses on the trading journal. The coming price action will determine if those unrealised positions have to be closed out.
On the overnight price action some very powerful charting signals can be catalogued into the traders set up journal for future reference.

 

Taking a look at the daily and using a confirmation only observation, the large range on the first of March posted a high at 21,171 points the following price action has not breached this level. The longer this persists the more probability of price weakness. I have marked the 50% midpoint of the large range, it is a charting / price phenomena that these large range periods can offer resistance or support at the midpoint. This is a practically strong observation in the weekly chart. (There was an excellent book written on the subject called “The Japanese chart of charts”)

Wall street daily  (-).png

 

 

 

In the intraday session of the market using a 1 hour chart a very nice reversal signal setup has marked the high for now.

The exhaustion high followed by the larger range hourly bar suggest the buyers have left. The inside range and second short range also confirm the absence of buyers, and finally the breakpoint as long positions are closed and the short sellers see opportunity.

 

Wall Street 1 hour (-).png

 

So where too? Referencing back to the daily chart the last spike low set on the 3rd of April has a low of 20,570.

The importance of this level is based around the fact that during the session the market found buyers at the low a price breakdown below this level would simply put further pressure on the long positions, intraday momentum should be monitored for both support and outright rejection at this level.

** Trading always incorporates stops, this setup is no different.**

 

 

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  • 1 month later...

Hi 

 

I see you have posted images of cash charts of the DJI provided by IT Finance/ProRealTime. Would you kindly let me know if what I am seeing is the premium version provided by ProRealTime when one opens an account with them linked to an IG CFD account?

 

Thanks

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  • 1 month later...

Hi   The Dow and US crude could be worth keeping an eye on. Yesterday's fall from the high for Dow is a nice pull back and linked to the continued downturn in Oil which had a strong push down yesterday to test long term support (since Oct 2016). This was done on only moderate volume and so looks to have been caused more by vacuum than strong bearish pressure. Are the oil bulls just laying in wait?

 

Both could be due a strong bounce up or strong break lower. The US open should be interesting.

 

http://www.barrons.com/articles/look-out-below-dow-drops-60-points-as-oil-tumbles-bonds-gain-1497992484

 

Wall Street_20170621_10.34.pngOil - US Crude_20170621_10.33.png

 

 

 

 

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  • 7 months later...

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