As we anticipated last week (see post here), the market weakened, breaking the support around the 1420 level. Although it tried to hold on Monday, the buyers failed to rally off of support and sellers took the market down decisively on Tuesday. The remainder of the week saw the market slide lower down to the 1394 level painted on the closing days of summer here in the US.
Although downside volume was sustained, price closed several days in a row around the same level, and on Friday refused to go below the end of summer support after dipping to that level. So we can expect a rally early next week.
Given the current market condition and structure, the odds favor further downside after a corrective rally. We’ll be watching any up move early next week closely. I am anticipating a push up to and maybe a little above prior support (black dashed arrow). Watch the spreads, volume and the wave up. If there is a strong push up on good volume, we can re-enter the trading range that began in September. I view the odds of this as lower than a weak rally that finds resistance at prior support. From there, I would anticipate a drive down by sellers breaking the 1394 support.
Chart Reading Mastery
We have gotten several emails lately asking when we will so another Chart Reading Mastery course. Typically, we do this twice a year (spring & fall) and it always sells out. I’ve gotten a lot of complements about it, and interestingly, the word seems to be out as more and more professional traders and fund managers are taking the course.
We will not be doing the course this fall. I am writing a book on trading psychology and that is taking all of my time and attention. If you would like to start the course right now, however, you can contact Helen directly. We have the recordings and all the materials available from the most recent class, which you can access. You can then join the live course next spring if you like, paying only the difference in price, if any. Helen can be reached by email at: helen-at-tradingpsychologyedge.com (use the @ symbol for ‘-at-‘ ). Information about the course, what is covered, participants’ comments, etc, can be found at this link: Chart Reading Mastery Course
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