Where Do We Go From Here?
It's been a while since I've mailed out an ezine. I've been busy.
But some things are developing in the charts and I think it's important to let you know what I see.
First off, I'm not a Professor of Doom. I'm not saying to bury your gold bars in the back yard. But the charts are not looking pretty.
The following chart is a daily chart of the Dow, using Ichimoku charts. I'm going to cover just the highlights of what I see. So this will be brief.
With Ichimoku charts, the Kumo (cloud) is considered an area of support or resistance. Since price is currently below the Kumo, then we are said to be in a bear market environment.
I have circled an area on the chart where the Tenkan-Sen (blue line) crosses down and through the Kijun-Sen (red line). When this occurs above the Kumo, then it is a mildly bearish sign. When it occurs below the Kumo, as it does here, then that is a strong bearish sign.
The next circle down shows the price candles riding the bottom line of the Bollinger Bands. Some traders mistakenly think price always bounces off this bottom line. Not true. Price can continue to push this line lower and lower.
The bottom circle shows an oversold situation with the Stochastics setting. But the RSI has fallen below the crucial line of 30. Once again, being at the bottom of this chart doesn't guarantee a bounce. These indicators can stay on the bottom of the chart for a prolonged period.
Now, I don't have a crystal ball. I am also not an alarmist. At the same time, I wanted you to be aware how bad this looks. I am not going to tell you how to trade this scenario. The market seldom goes straight down day after day. So we could see some bounces along the way, just as we did between 3 and 4 this past Friday. But a short covering bounce will not revive this market. It will take a great deal of good news, in my opinion. And, at this point, I cannot find a source for that news.
This ezine is not meant to alarm you. But it might make you take a more sober view of any long trades you planned on holding over.
I will have more news about trading the Ichimoku charts within a few weeks.
Hope your trading is going well.