Down Trend Continues

As I posted on HMS blog, today did not reverse what I believe to be a rolling process. Open the hourly:



1. Price action failed to retrace 100% of yesterday's down leg.
A reversal would require a 100% retrace, and a bullish move would add another 38% to the upside. That would require a retest of the 1100+ high. It may happen tomorrow, but it did not happen today - and to break a high, you need momentum.

2. We closed within the top trend line on a down trend channel which can be seen on the hourly chart. I drew the top trend line at the top of the candlestick wick - but a more parallel channel may be formed at the closing level. It is early, and what matters most is that we travel down along the line or get rejected strongly.

3. We set a new intraday low.
If we keep setting intraday lows and don't make new highs - we are in a downtrend.

4. The closing candlestick on the hourly is bearish
This is a shooting star. When a shooting star follows a long green candle, it is a sign that a reversal is likely - especially if the shooting star sits above the prior candle. Generally, a closing star is often followed by a gap down. I don't know about that today.

5. The 20pMA is about to cross the 50p MA
Generally, this is bearish. It is a sign that short term price action is sharply dropping relative to mid term price action. Last time we had a cross like this we shaved 40pts in 2 days. Also, looking at the daily line graph of the closing price (not shown here), you will see that we did not make contact with the 20p MA. At no time during this entire rally have we turned to the line and not touched - not once. This suggests that we have at least a trip to 1070 ahead of us. Most of the times we crossed below the 20p MA we met the 50p MA - opening the possibility of 1040.

I also highlighted something very interesting. Notice the area labeled A on the chart? Look how closely that zone resembles where we are today - zone B. Look how there was a failure to completely retrace the first down leg. The next bar that printed was a shooting start. The bars that followed were substantially down. Now notice the relationship between the 20pMA and the 50pMA at that time. Very similiar conditions.

One final note, we still have a gap down below 1060 - which is the 50% retracement level of this last rally leg. We have not left too many unfilled.

Let's see what tomorrow brings.