Doubling up on this post, since there appears to be a glitch with the first.
Another short term breakdown with further bearish developments overnight. The bearish, daily impulse bar of SPI (not shown) has a climatic price action behaviour where further data over the coming days/weeks is required for it’s confirmation. What I am looking for is an impulse move to the downside followed by an above average reaction and a retest of the low made on the climactic day (or period in analysis). Below is the example of 2011 low climactic price action behaviour, which I have printed and look at every day at present. I use this as a guide going forward.
Weekly Chart of XJO with Wyckoff Method Analysis showing 2011-2012 bottom formation. Climatic Action and Automatic Rally is highlighted. Compare this reaction to the prior reaction around June July 2011 if you like ? Much greater rally standing out IMO ! It doesn’t mean that we will see it unfold in exactly the same fashion since there are other accumulation schematics. But all accumulations have the same phases regardless, if Wyckoff Method is observed.
Next major support with XAO ( XJO shown above) since there are no intermediate and short term supports left, is the zone of 4650. Refer you to earlier posts. Will it be tested ? No one knows. If it is tested, will it hold ? Same answer again.
What may happen when we make a new low like the one overnight, with SPI ? Further shorts are likely by new market participants in my opinion. How much extra fuel will they have to drive the market down further ? We will see over the coming weeks.
In the US, the Martin Luther King Jr. Day is on Monday the 18th where US Markets are closed. Following day the US Markets had been historically bearish. Then comes the US FOMC Meeting on 26-27th of Jan.. Until the FOMC meeting is out of the way, I personally expect extreme volatility not just in the US Markets but also around the Globe.
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