Well, it was quite a week. In Deep Practice, we had discussed the 1189 – 1155 area as the potential stopping area of the falling market, so traders had an idea of what the market might do, at least for this leg of the decline.
You can see on the weekly chart posted that we decisively broke the demand trend line. This occurred on Tuesday. At that point, it was pretty evident that we would be heading lower to test at least the 1189 level. I know that there was a reversal bar with good volume and several traders wrote and asked if that was a climax. In a word, no. When a market falls straight down like this on good volume, it is very unlikely that the support will hold.
We reviewed this in some detail in Deep Practice, our weekly meeting where traders learn to read the market by its own action, bar-by-bar. Deep Practice is set up as a learning environment, so you are challenged in a supportive way. You can learn more about this weekly program here: Deep Practice.
So what’s next? There was good volume and a decent rally at the end of the week – enough probably to (at least temporarily) stop the current downdraft. We may see some consolidating early in the week and a retest of last week’s lows. A rally back up into the 1237 – 1250 level seems reasonable, perhaps even a little higher (see boxed area). We have to watch and observe the character of any rally up.
David Weis Webinar!
Special Note: David Weis is releasing his terrific Weis Wave plug-in along with a training webinar on August 17th. David was very keen on the market falling hard for over a month. He came to that conclusion in good part by his Weis Wave which measures the volume and price relationships in the market in a similar way in which Richard Wyckoff used to measure price and volume off the Ticker Tape, but David has modified this for modern markets. And, boy, what a valuable tool!
Check out the link below. It is filled with incredible examples of how he uses this effective tool, including intraday, stocks, futures and even FX. I’ll post more on this in coming days, but for now, here is the link: David’s Weis Wave
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