The Dow - Divergence analysis 2
Please first check the tagged chart "The Dow - Divergence analysis". You can see there the reliability of all these bearish divergences. On this chart, only the latest divergences are labeled.
I am short since Monday on the US stock market and major global markets, and now the weekly confirms my bearish bias, with a very ugly pattern.
First of all, price formation. A double top formed with divergence on the MACD lines and Force Index (which includes volume!), and last week there was a retest of that double top, with a false breakout, with a gravestone doji. That's bearish enough for me, considering this is the weekly chart.
The MACD shows three bearish divergences, one that includes the year end rally, and two for the double top.
You can see a huge class A bearish divergence, which I believe didn't play out yet. There was a strong reaction two months ago, but not enough considering the size of the divergence. After another push, a class B bearish divergence formed with the double top. This is one of my favorite patterns, for reverseals or strong corrections, class A followed by a retest of that level with a class B. Furthermore, there is a huge bearish divergence on the MACD histogram. Look how little power the bulls had with this last rally. All these divergences for me point to a very bearish short term future.
Let's take a look at Force Index, which works here cause we have volume. The double top came with a bearish divergence also on FI, and with this last rally there was no cross over zero. This points out how strong the bears really are. The level at which we find the Force Index today is the lowest since the start of 2013!!!! This shows bear power!
The EMA wave shows value, and when price gets close to value, it's good to go with the trend. Right now there are no bullish signals, neither here, nor on the daily, so I will be looking for a further decline.
Please look at the pattern described on the chart *!! which I think is very important.
If we analyze candlesticks, last week there was a gravestone doji star, a very strong reverseal candle, especially on weekly charts. This week, a closing marubozu that broke local support.
Support levels are labeled on the chart, and those are the levels to watch for the end of this correction. I am looking to add to my short using the daily chart.
I am short since Monday on the US stock market and major global markets, and now the weekly confirms my bearish bias, with a very ugly pattern.
First of all, price formation. A double top formed with divergence on the MACD lines and Force Index (which includes volume!), and last week there was a retest of that double top, with a false breakout, with a gravestone doji. That's bearish enough for me, considering this is the weekly chart.
The MACD shows three bearish divergences, one that includes the year end rally, and two for the double top.
You can see a huge class A bearish divergence, which I believe didn't play out yet. There was a strong reaction two months ago, but not enough considering the size of the divergence. After another push, a class B bearish divergence formed with the double top. This is one of my favorite patterns, for reverseals or strong corrections, class A followed by a retest of that level with a class B. Furthermore, there is a huge bearish divergence on the MACD histogram. Look how little power the bulls had with this last rally. All these divergences for me point to a very bearish short term future.
Let's take a look at Force Index, which works here cause we have volume. The double top came with a bearish divergence also on FI, and with this last rally there was no cross over zero. This points out how strong the bears really are. The level at which we find the Force Index today is the lowest since the start of 2013!!!! This shows bear power!
The EMA wave shows value, and when price gets close to value, it's good to go with the trend. Right now there are no bullish signals, neither here, nor on the daily, so I will be looking for a further decline.
Please look at the pattern described on the chart *!! which I think is very important.
If we analyze candlesticks, last week there was a gravestone doji star, a very strong reverseal candle, especially on weekly charts. This week, a closing marubozu that broke local support.
Support levels are labeled on the chart, and those are the levels to watch for the end of this correction. I am looking to add to my short using the daily chart.
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