This may look messy at first, but it's really just a downtrend and a trading-range interacting with each other. From the Sept downtrend:
http://s22.photobucket.com/user/Hcour/media/CAD1.jpg.html?sort=3&o=1
http://s22.photobucket.com/user/Hcour/media/CAD2.jpg.html?sort=3&o=0
Click on the magnify icon bottom-right to expand charts.
I'm currently studying David Weis's new book, based in Wyckoff price/volume interpetation, but with Weis's modern spin. One of the things he talks about is "the story of the lines". Hence this analyis of the CAD, which seems to lend itself very well to this technique:
1 - Spring of the 6/24 low. Confluence of that previous low and the down channel outer demand line CC. 7/5, wide spread, close nearer low at break of major support, strong volume, but no follow-thru.
2 - Previous horizontal support at line B becomes resistance, axis line. Of these six bars, five of them revolve around B. Down bars are relatively quite narrow vs the up bars. Confluence of support at B and major down channel demand line BB.
3 - Confluence of support at downtrend channel demand line BB and horizontal line C. 8/23 is fascinating, wide spread closing on the high on relatively strong volume with the low at C and the high/close at BB.
4 - Confluence of resistance at major downtrend supply line AA and upthrust of horizontal resistance at A, which at this point has now established itself as the top of the significant trading-range A-C within this downtrend.
5 - Following a reaction to the midway point of the trading-range and support at axis-line B 10/10, the rally to 5 meets resistance at a confluence of A and AA again, a shallow test of the upthrust at 4 on a narrow-range bar closing poorly, followed by wide-range down bar closing on the low on high volume back to B, that one bar wiping out the previous 8-bar rally.
6 - Test of the breakdown on narrow ranges and low volume. Resistance a confluence of new, short-term downtrend supply line DD and B.
7 - Fascinating. From 6 a major breakdown, a vertical area plunging thru former trading-range support C, eventually finding support at confluence of demand channel line BB and short-term demand line EE (established since the short-term upper-channel line DD was drawn at 6). Here a small trading-range plays out as previous horizontal support at C and then short-term downtrend line DD become resistance at the top of the range while BB, EE, and then D converge to become support at the bottom of the range.
8 - Churning. Following a spring of support D/BB on 12/20 there is a shallow rally/test of the trading-range high with no follow-thru.
9 - Double-test. Resistance at DD/C and the previous high on mediocre volume, second lower-high, followed by a vertical decline on strong volume through all kinds of major former support.
Lots of weakness in the background since 4. Major support breaks of the range and both longer-term and shorter-term channels. Currently price is hugging those channels at CC/EE. Right now the question is whether this is a spring/climatic action of the longer-term down channel or a true breakdown. At this point, one can only assume further downside. Will wait for tests/reactions, where the information really is.
http://s22.photobucket.com/user/Hcour/media/CAD1.jpg.html?sort=3&o=1
http://s22.photobucket.com/user/Hcour/media/CAD2.jpg.html?sort=3&o=0
Click on the magnify icon bottom-right to expand charts.
I'm currently studying David Weis's new book, based in Wyckoff price/volume interpetation, but with Weis's modern spin. One of the things he talks about is "the story of the lines". Hence this analyis of the CAD, which seems to lend itself very well to this technique:
1 - Spring of the 6/24 low. Confluence of that previous low and the down channel outer demand line CC. 7/5, wide spread, close nearer low at break of major support, strong volume, but no follow-thru.
2 - Previous horizontal support at line B becomes resistance, axis line. Of these six bars, five of them revolve around B. Down bars are relatively quite narrow vs the up bars. Confluence of support at B and major down channel demand line BB.
3 - Confluence of support at downtrend channel demand line BB and horizontal line C. 8/23 is fascinating, wide spread closing on the high on relatively strong volume with the low at C and the high/close at BB.
4 - Confluence of resistance at major downtrend supply line AA and upthrust of horizontal resistance at A, which at this point has now established itself as the top of the significant trading-range A-C within this downtrend.
5 - Following a reaction to the midway point of the trading-range and support at axis-line B 10/10, the rally to 5 meets resistance at a confluence of A and AA again, a shallow test of the upthrust at 4 on a narrow-range bar closing poorly, followed by wide-range down bar closing on the low on high volume back to B, that one bar wiping out the previous 8-bar rally.
6 - Test of the breakdown on narrow ranges and low volume. Resistance a confluence of new, short-term downtrend supply line DD and B.
7 - Fascinating. From 6 a major breakdown, a vertical area plunging thru former trading-range support C, eventually finding support at confluence of demand channel line BB and short-term demand line EE (established since the short-term upper-channel line DD was drawn at 6). Here a small trading-range plays out as previous horizontal support at C and then short-term downtrend line DD become resistance at the top of the range while BB, EE, and then D converge to become support at the bottom of the range.
8 - Churning. Following a spring of support D/BB on 12/20 there is a shallow rally/test of the trading-range high with no follow-thru.
9 - Double-test. Resistance at DD/C and the previous high on mediocre volume, second lower-high, followed by a vertical decline on strong volume through all kinds of major former support.
Lots of weakness in the background since 4. Major support breaks of the range and both longer-term and shorter-term channels. Currently price is hugging those channels at CC/EE. Right now the question is whether this is a spring/climatic action of the longer-term down channel or a true breakdown. At this point, one can only assume further downside. Will wait for tests/reactions, where the information really is.
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