Heading into the final week of trading for the
year, the monthly chart shows price in December having made a lower high and
lower low versus November's candle. Price is trading below its monthly pivot
but above the MM and MY MAs and above the yearly pivot.
This mixed picture does nothing to answer the
question of whether we are on the upside or downside of the multi-year cycle. If price can close this week above the MM MA then that average will have turned
upward, a clue that the August low was a multi-year low. Should price close
below the MM MA, that average will likely remain flat and leave open the
possibility that price has not yet seen its MY low.
The weekly chart shows price last week making a
lower high and higher low than the prior week, with price closing above the MW
MA but just below monthly pivot resistance. Price early in this week's candle
has opened above its weekly pivot but is currently trading below it and is
testing the MW MA from above.
Just as the monthly chart is inconclusive as to
whether we are on the upside or downside of the MY cycle, the weekly chart is
inconclusive as to whether we are on the upside or downside of the multi-month
cycle. We are overdue to have seen a MM low; it is possible that the low of two
weeks ago was that low, but it is also possible that the low has yet to be
seen. If we are on the upside of the MM cycle, price should find support here
at the MW MA and turn higher into its 1/22 projected MM high. If price is still
on the downside of the MM cycle, price should move lower this week and take out
this month's lows.
The daily chart shows price last week making a
Monday low and Thursday high a variation of the ML/FH pattern frequently discussed in this blog as typical behavior of price during an uptrend. We are overdue for a multi-week high to be seen, however, and price has been
unable to move above the 12/17 high; this leaves open the possibility that price
saw an early MW high under MM MA resistance, a bearish scenario which would
indicate that price is likely on the downside of the MW and MM cycles. If so,
price should drop sharply into its 1/6 projected MW low. If price can find
support at current levels and take out the 12/17 high, it would indicate that
price was still on the upside of the MW cycle and keep alive the possibility
that we are also on the upside of the MM cycle. Needless to say, how this
triangle pattern that has been forming the past four weeks is resolved could
have profound implications for the long-term health of the market.
The hourly chart shows price making a 24Hr (and
multi-day) high in Thursday's shortened trading and then dropping below the 24Hr
MA and new daily pivot in Sunday evening trading. Price has fallen from the
open today and is currently testing the weekly pivot for support.
We are overdue for a 24Hr low to be seen and are
also in the timeframe to see a multi-day low, and the weekly pivot would be a
likely place to find support for both of these lows. When price is able to
trade above the gold Session MA and turn that average upward, we will know that
the 24Hr low has been seen; when price is able to trade above the daily pivot
and 24Hr MA and turn that average upward, we will know that the MD low has also
been seen.
Traders should be prepared for extreme volatility
this week. While the market could be setting up for a strong bounce off of
weekly pivot support if it is on the upside of the MW and MM cycles, it could
also trade sharply lower this week if we are on the downside of those cycles.
Until price is able to make new all-time highs and prove that it is on the
upside of a new multi-year cycle, the downside risk of the bearish alternative
makes for a terrible risk-reward scenario for swing traders and investors.
No comments:
Post a Comment