Per NFTRH 587 and yesterday’s post with respect to the Bearish Engulfing candle…
“A word on daily chart candle formations… their efficacy is measured out in a day or two and are pertinent mainly to day traders.”
Step 1, the post engulfing drop (day 1), came about in dramatic fashion. It should not go much past today (if a currently positive pre-market were to reverse negative) if this is just to be a sentiment twitch type mini-correction.
Of course SPX is not going to make it that easy for we casino patrons to manage. The pre-market bounce at this moment (7:52 US ET) projects to 3265. See that red shaded horizontal zone on the chart below? That’s short-term resistance defined by a little lateral shelf and the EMA 20 (3271).
So the questions remain…
- Mini or maxi correction (kicked off on knee-jerking viral contagion fear as it is)?
- If mini, will it find resistance at the EMA 20 and then drop to the SMA 50 for test or will it just resume its robo-bull because after all, it’s a sentiment event and the machines and various assorted market speed freaks can’t wait to screw the shorts? Put it this way, it could use a test of the SMA 50 if it wants to do something healthy or at least normal.
- If maxi, after taking out the SMA 50 will stop at or before the lowest gap shown? That would feel terrible to man (but not machine, which may already have it programmed) and get some bears chest thumping, but would just be a normal and healthy test of the up trending 200 day average. Or… would maxi really mean MAXI, with a test of a different kind that we’ve got on radar for 2020?
First things first.
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