A decline into the previous day's gap, which should ease some of the pressure of the higher prices and could perhaps initiate a consolidation phase at this level.
The Buy signal continues as price catches up with itself – note how steeply the averages are now moving.
As we have 2 small T structures combining strength, it seems sensible to consider them as a combination. The 2 lows are not dissimilar in price and at a similar oscillator level – we can consider this to be a double bottom – and so if we centre this structure on 03 November we can see some correlation with the previous peaks, and it projects high in early and late January.
Yesterday the market seems to have responded to the complacency as warned by the Put/Call ratios with some mild selling, and traders quickly respond with demand for hedging products as the VIX rises. Be prepared for more consolidation as traders lock in the profits at the higher levels acheived this week.
The market continues to look a bit dangerous and may need some really volatile days ahead to re-set the perhaps slightly over bullish and exuberant nature and reduce some of the growing pressure that the higher price range has brought.
Be prepared for whatever is coming next, and trade with confidence:
To receive detailed daily analysis, guidance and the updated daily Buy / Sell trigger levels being generated by the Trading the Line system before the market opens, and intraday alerts when appropriate, please become a Member and Sign up for Alerts & Observations – includes access to Members Area and the Explanatory Notes for all of the concepts discussed.
Disclaimer: This is the diary of a personal trading system, its methodology and the signals that it is producing. You are welcome to follow along but please understand that the information presented here is for educational purposes only. No recommendations are being made to buy, or sell stocks, options or futures contracts. Please consult your own financial advisor before making any investment decisions.