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Lawrence's Comment Recap Dow zoomed up on no volume initially and exploded to Y+2 with a sharp reversal. Signature blowoff top in place pointing to a drop back down to Y-0. With ...READ MORELawrence's Comment Recap Breadth weaknesses dictate the week even though there were multiple attempts to rally the market back up. Closed the week below Y-0 and midpoint. Outlook B-0 / Y-0 zone ...READ MORELawrence's Comment Recap Y+1 (i.e. 15000) acted as resistance as expected and sent Dow back down yet it failed to test Y-0. This is bullish. 2nd attempt at Y+1 breached the resistance ...READ MORELawrence's Comment Recap No take down to Y-0 happened as BOJ did their deeds again. Dow was moving in lock step with ninja. Up drift all week with light volume. Closed the ...READ MORELawrence's Comment Recap Out of the 100+ years of historical data I have, there were only a very small number of matching patterns for what has occurred last week in the ...READ MORERecap Tried to stage a rally off Y-0 but failed as it formed a 3 pushes, giving experienced traders time to exit their longs and went short. Target area Y-1 ...READ MOREDow 30 May 27 to May 31 OutlookDow 30 May 23 to May 27 OutlookDow 30 Aug 09 to Aug 13 OutlookDow 30 Apr 11 to Apr 15 OutlookDow 30 Sep 05 to Sep 09 OutlookDow 30 Jul 08 to Jul 12 OutlookDow 30 Nov 17 to Nov 21 OutlookDow 30 Mar 21 to Mar 25 OutlookDow 30 Oct 18 to Oct 22 OutlookDow 30 May 16 to May 20 Outlook
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Where is Dow Heading According to Basic Chart Patterns and STOPD?
Sometimes it is better to look at the big picture from afar to gain better perspective. Here is the weekly chart of Dow Jones Industrial Average.
FOMC Week Tendency
The blue arrows mark the week for which we have FOMC meetings and announcements.
Do you know that historically it is very likely within 2 meetings after each announcement that both the week high and week low are tagged?
The meeting back in March has its week high tagged, but not the week low (highlighted by red zone). It is now the potential downside target.
Basic Chart Patterns
Measured up move off 2015 year low (marked by the 2 red lines), weekly consolidation or pullback is due after the upside target was tagged.
Trend line breakout (the upper orange line) being tested from above at this April FOMC week. Failing to hold that we get trend line false breakout with previous year close (highlight by yellow zone) the next downside target.
STOPD Patterns
Dow tested previous quarter high and failed to hold above on weekly closing basis, going back down to previous year close (yellow zone) and previous quarter / year midpoint (middle blue line) is in play. How it gets there does not matter. What matters is that the dynamics will very likely nudge the market to complete the biases.
End Notes
There are more to understanding charts the right way. One important rule is that price levels from higher timeframes are more important than the lower timeframes. Another important rule is that STOPD levels from higher timeframes often dictate the moves in non-serial matter hence very difficult to notice until you keep track of them as part of your routine chart reading. Knowing where we stand in terms of weekly context can help us handle day-in day-out trading with much better clarity and confidence.
My premium members got the special update knowing a swing top is in within a day. That is based on custom market breadth models which can help us refine the timing and knowing the magnitude of the pullback. It is a very powerful tool but we still need solid chart reading skill to manage our trades properly.
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