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The monthly trend is still severely down.. Yes, we are
bouncing off support, but unless I'm trading
really short term, I'm going with the powerful long-term
down-trend.
The weekly trend is still down, though it is close to
crossing upward.. Often there are ideal trades at
times when the trend is about to turn but does not
actually turn.. Especially when these happen at
Fib levels, which is where we are now..
There are techniques for determining which Fib levels to
enter at, to reduce the chance of jumping the gun, or
incorrectly picking which fib resistance/support level
will hold. I'll explain this in separate email if there is
interest.
Now, back to the chart... As long at the monthly and
weekly trends are down, I want to short the daily chart.
The next two good shorting zone are at the confluence areas
of 2732 to 2742, and 3019 to 3045.. Price may force
through them, but there will be resistance at these levels.
One high-probability way to trade this set-up, is to watch
NAZ component stocks for reliable short price patterns at the
time the index is at good resistance... This increases the
odds of success dramatically..
Because these are confluence areas, they offer stronger resistance
than generic fib levels.. These represent areas where longer-term and
shorter term traders will actin in unison to sell the market.
There are more resistance levels higher up too, so I don't see us
screaming up to a new bull-market yet...
My Fib studies are attached, showing how the confluence resistance
levels are calculated...
Good trading..
---
DiNapoli Fibonacci techniques -
http://www.fibtrader.com
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