Best of the Week
Most Popular
1.Crude Oil Price Trend Forecast 2016 Implications for Stock Market - Nadeem_Walayat
2.Odds of Winning Walkers Crisps Spell & Go olidays K, C and D Letters - Sami_Walayat
3.Massive Silver Price Rally During The Coming US Dollar Collapse - Hubert_Moolman
4.Pope Francis Calls For Worldwide Communist Government - Jeff_Berwick
5.EU Referendum Opinion Polls Neck and Neck Despite Operation Fear, Support BrExit Campaign - Nadeem_Walayat
6.David Morgan: There Will Soon Be a Run to Gold Like You've Never Seen Before - Mike Gleason
7.British Pound Soars on BrExit Hopes Despite Remain Establishment Fear Mongering - Nadeem_Walayat
8.Gold Price Possible $200 Rally - Bob_Loukas
9.The Federal Reserve is Not Going To Raise Interest Rates and Destroy Gold - Michael_Swanson
10.Silver Miners’ Q1’ 2016 Fundamentals - Zeal_LLC
Free Silver
Last 7 days
Operation Black Vote BrExit Warning for the Wrong EU Referendum - 27th May 16
UK Immigration Crisis Hits New Extreme, Catastrophic ONS Migration Stats Ahead of EU Referendum - 27th May 16
Many of the World’s Best Investors Made Their Fortunes This Way…And You Can Too - 27th May 16
The Ugly Truth About Stock Market Manipulation and Gold Prices - 27th May 16
Gold Price Looking Vulnerable While Gold Stocks Correct - 27th May 16
The 5 Fatal Flaws of Trading - 27th May 16
The Next Big Crash Of The U.S. Economy Is Coming, Here’s Why - 27th May 16
A New Golden Bull or Has the Market Gone Too Far Too Fast? - 27th May 16
It Feels Like Inflation - 26th May 16
Negative Interest Rates Set to Propel the Dow Jones to the Stratosphere? - 26th May 16
S&P Significant Low has Occurred – Not Likely! - 26th May 16
Statistics for Funeral Planning in UK Grave - 26th May 16
Think Beyond Oil And Gold: Interview With Mike 'Mish' Shedlock - 26th May 16
Hard Times and False Mainstream Media Narratives - 26th May 16
Will The Swiss Guarantee 75,000 CHF For Every Family? - 26th May 16
Is There A Stocks Bear Market in Progress? - 26th May 16
Billionaires Are Wrong on Gold - 26th May 16
How NOT to Invest in the Gold Market - 26th May 16
The Black Swan Spotter...Which Saw the Oil-Crash coming; now says the “Invisible Hand” will push Brent to $85 by Christmas - 26th May 16
U.S. Household Debt Still Below 2008 Peak - 25th May 16
Brexit: Wrong Discussion, Wrong People, Wrong Arguments - 25th May 16
SPX is at Strong Resistance - 25th May 16
US Dollar, Back From the Grave? - 25th May 16
Gold : Just the Facts Ma’am - 25th May 16
The Worst Urban Crisis in History Could be Upon Us - 24th May 16
Death Crosses Across The Board Are IRREFUTABLE Stock Market Sell Signals - 24th May 16
Bitcoin Trading Alert: Bitcoin Price Stays below $450 - 24th May 16
Stock Market Crash Death Cross Doom Prevails - 23rd May 16
Did AMAT Chirp? Implications for the Economy and Gold - 23rd May 16
Stocks Extended Their Rebound On Friday - Will They Continue Higher? - 23rd May 16
UK Treasury Propaganda Warns of 3.6% Brexit Recession, the £64 Billion Question? - 23rd May 16
Stock Market Support Breached, But Not Broken! - 23rd May 16
George Osborne Warns of 18% Cheaper House Prices - BrExit for First Time Buyers - 22nd May 16
Gold Bull-Phase I Continues to Confound (The Trek to “Known Values”) - 22nd May 16 r
Avoiding a War in Space - 22nd May 16
Will Venezuela Be Forced to Embrace the US Dollar? - 21st May 16
Danish Central Bank Stumbles with Its Currency Peg to the Euro - 21st May 16
SPX Downtrend Underway - 21st May 16
George Osborne Warns of More Affordable UK Housing Market if BrExit Happens - 21st May 16
Gold And Silver 11th Hour: Globalists 10 v People 0 - 21st May 16
David Morgan: There Will Soon Be a Run to Gold Like You've Never Seen Before - 21st May 16
Gold Stocks Following Bull Analogs - 20th May 16
The Gold Chart That Has Central Banks Extremely Worried - 20th May 16
Silver Miners’ Q1’ 2016 Fundamentals - 20th May 16
Stock Market Rally At the End of the Road? - 20th May 16
British Pound Soars on BrExit Hopes Despite Remain Establishment Fear Mongering - 20th May 16
NASDAQ 100, FTSE, and British Pound - When Rare Market Data Screams, Listen  - 20th May 16

Free Instant Analysis

Free Instant Technical Analysis


Market Oracle FREE Newsletter

Why 95% of Traders Fail

Stock Market Easter Egg...The Jaws of Life

Stock-Markets / Stock Markets 2016 Mar 28, 2016 - 11:27 AM GMT

By: Rambus_Chartology

Stock-Markets

Today I would like to show you some more charts on some if the different stock market indices we looked at in the last Weekend Report. Last weekend we looked at alot of the bull market uptrend channels that are still in place since the 2009 crash low. It's always important to keep an open mind no matter how strongly we believe things to be when it comes to the stock markets. Everyone can't get in at the bottom and everyone can't get out at the top and then there is the consolidation phase that trips up both the bull and the bears alike.


Lets start with a daily chart for the INDU which I'm showing a large trading range that began during last August's big decline labeled with the red #1. The INDU then rallied back up to the 17,950 area, red #2, and started to form that seven point bearish falling flag which I thought was going to be a bull flag until the price action broke below the bottom rail which led the the second low in January and February of this year which formed a double bottom, red #3. The INDU has rallied strongly again and is within 435 points of reaching the top of the trading range again. Just for argument sake, if the INDU reaches the top of the trading range it will have completed the third reversal point at 17,950 which would be an odd number of reversal points creating a possible big double bottom. Keep in mind this is only one scenario at this time and there is a lot of work to do before we can even begin to call the price action a double bottom.

Dow Daily Chart

Below is basically the same chart as the one above which has the moving averages on it. This past week the 20 day ema crossed back above the 200 day simple ma with the 50 day ema now rising strongly. During big trading ranges like this it's not uncommon to see them cross back and forth before either the bulls or the bears setup the next impulse move out of the trading range. Once that happens they will get a nice alignment to them that will show the impulse move.

Dow Daily Chart 2

This next chart is a weekly look at the INDU which shows an even bigger trading range going back over two years. It's not the cleanest trading range I've ever seen but the brown shaded support and resistance zones, as large as they are, have held on multiple test. As strongly as the bears have tried they have not been able to move the INDU below the bottom of the support zone on numerous occasions starting way back in 2014. No matter how bearish things become, when the price action is trading down in the support zone the bulls manage to find a way to rally the INDU higher. The same thing is happening at the top of the big trading range at the resistance zone. One slight advantage the bears have right now is they have created a lower high at reversal point #3 which maybe deceptive as I'll show you in a minute.

Dow Weekly Chart

I know many don't see this next daily chart for the INDU as a possible outcome but regardless of what I may think or anyone else for that matter a setup is taking shape that could blow the roof off the INDU. Last week the INDU tested the top rail of a possible triangle consolidation pattern and backed off a bit telling us it's hot and to be respected at this point in time. This is a critical inflection point for both the bulls and the bears. The bears need to reverse the price action and create another leg down and complete the 5th reversal point which would make this a triangle reversal pattern to the downside. On the other hand if the bulls are in control they should be able to move the INDU above the top rail creating a triangle consolidation pattern to the upside. Again this scenario is still on the table with no confirmation in either direction yet but it gives us a road map we can follow which is better than no road map at all. This big trading range is going to be one of two things a consolidation pattern or a reversal pattern.

Dow Daily Chart 3

I would like to show you how this possible triangle consolidation pattern fits into the big picture of the bull market that began at the March 2009 crash low. As you can see from this longer term perspective the blue triangle pattern is showing an indecisive trading range with a lower high and a higher low. Until we see some type of reversal pattern form the bull market remains intact. Maybe the 5th reversal point will hold and the triangle will end up being the reversal pattern. But, and there is always a but, since the INDU is in a bull market until proven otherwise the odds favor a breakout to the upside. It's also possible that the INDU declines from this point but finds support on the bottom rail of the blue triangle forming a sixth reversal point similar to the bullish rising wedge which formed between 2011 and 2012.

One thing I'll be watching very closely over the next several weeks will be to see how the price action interacts with the top rail of the blue triangle. The perfect breakout scenario would be to see the price action hit the top rail and have a mild decline. Then if the bulls are truly in charge the next rally attempt would take out the top rail on heavy volume. Then for confirmation I would like to see a backtest of the top rail from above.

Dow Weekly Chart 2

The 20 year monthly chart for the INDU does a good job of showing you the bull market that began in March of 2009. Until we see a reversal pattern form of some kind it is what it is until proven otherwise.

Dow Monthly Chart

I promised myself I wouldn't post this next long term monthly chart for the INDU as it has been frustrating watching the breakout and backtesting process over the last several years when I first posted the bullish possibility. As long term members know I call this very large pattern on the INDU, THE JAWS OF LIFE, which is the opposite of how most analysis see it. Most call it the JAWS OF DEATH. You can see the blue triangle that is basically forming on the top rail which is generally a bullish development. This is about as clear a picture you'll see anywhere on the long term perspective for the INDU.

Dow Monthly Chart 2

This last chart for today is the exact same chart as the one above but this time I'm showing it as a line chart. I really do know how bearish most folks are on the stock markets right now but when I look at this long term chart for the INDU I can't make a bearish scenario at this very moment. If anything it looks super bullish especially if the blue triangle gets broken to the upside. This isn't my opinion it's what the charts are strongly suggesting.

It's time to go out and hide some Easter eggs for the Grand kids. Bottom line, keep an open mind to any eventuality that may arise. All the best...Rambus

Dow Monthly Chart 3

All the best

Gary (for Rambus Chartology)

http://rambus1.com

FREE TRIAL - http://rambus1.com/?page_id=10

© 2016 Copyright Rambus- All Rights Reserved

Disclaimer: The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. Information and analysis above are derived from sources and utilising methods believed to be reliable, but we cannot accept responsibility for any losses you may incur as a result of this analysis. Individuals should consult with their personal financial advisors.

Rambus Chartology Archive

© 2005-2016 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Post Comment

Only logged in users are allowed to post comments. Register/ Log in

Catching a Falling Financial Knife