DOW - ES Charts 21/10 - 25/10

ChartMan

Legendary member
5,580 46
I had been thinking of a pullback before another push, bet there we are. The longer term view with a target of 940 in mind is now looking a better possibility. A lot is said about not taking any notice of "predictions" and "trade what you see". Part of what you see has to do with the past data from charts. If you see a long term uptrend, as we have now, is there really any point in going short? Well, maybe there is for the scalpers, but for those looking for a longer term position and a bigger move, you need to sit out the inevitable pullbacks before jumping on board. Having got yourself into a postion, then is the time to "trade what you see". Hoping it will go on up as the main trend is doing is foolish.You should be looking for an exit point, and one thing or another will tell you when to get out, be it either MA's crossing, some TA formation or whatever. The time to start thinking about a short position will be when the main uptrend is clearly broken. Better still, if you can stomach the wait and potential points lost on the "gamble" is to wait for a down trend to get established, or not , as the case may be.
Looking at today's DOW......The long entry was signalled by the Inv. H&S bounce of the topside of the 100MA at around 15:50. This would have been a safe entry. The exit would have been either the negative divergent peak ( which we didn't get) or a pullback to within 25 points of the 100MA. This is the point at which whipsaws often develop so whay sit on the nasty unpredictable ride? Here was a good out with 180 odd points in the bag.
The next long entry came at 19:07 as the bull flag broke out. I would have had concerns here as the flag didn't develop to it's usual 3 cycles......Still, it went on to pullback to support twice before developing another Inv. H&S before moving off up again.
Although the drop from the entry was only 20 points, SB's would have seen a 40 point move from their entry..... A good case for placing more faith in your TA skills than the price shown by the SB co's.Exit at the end of the day showed a gain of 60 odd points. ANd you didn't hold overnight , did you? :)
The DOW is trading in a 300 point channel and moving a bit quick to the upper resistance line....
 

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ChartMan

Legendary member
5,580 46
The volume today,I suppose, says it all. More dense than Friday, and, broadly, consistent throughout the day, hence the sustained rise.But there has been divergence setting in across the last three peaks, so we could have a top here. Now we have two different outlooks for the DOW and ES.
I guess at the end of the day, it will depend on what happens next.... will there be support at 895? Looking at the volume longer term, the last 15 days has seen three five day volume cycles and today is the fith in the 3rd cycle. So that adds more importance to tomorrow, I guess. Maybe tomorrow will tell us where we are headed...... The expanding triangle say high volatility, but which way?
 

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ChartMan

Legendary member
5,580 46
Moved back to support channel.......
 

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jeadie1

Junior member
16 0
CCI

Hello Chartman,

I am a Novice TA. I keenly follow your DOW charts and find them very educational.
I think I have got a handle on the chart patterns; trend, support and resistance etc.

However I am struggling with the CCI,
I can see how divergence between the stock and CCI can help predict a change in short term trend. In what other ways can CCI be utilised.

Thankyou
James
 

ChartMan

Legendary member
5,580 46
It is generally accepted that when CCI is above 100, then there is strong upward pressure, and the reverse for when it is < -100.
For those that have longer term strategies, you can use the zero crossing , or trending towards it to make buy/sell/exit descisions.
Take a look here...
http://stockcharts.com/education/What/
 

ChartMan

Legendary member
5,580 46
Dow showing pullback and break out from the short down channel. Good bounce of 8300 and a break of 8550 should signal on and up. Maybe I'll get my Friday target of 8800 after all. :) Ther eis an Inverse H&S developed at the bottom and I give that, along with the bull flag a minimum target of 8650....but 8500 has to go to deliver the goods. Losing 8400 will result in a retest of 8300, where I would hope solid support is found.
 

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ChartMan

Legendary member
5,580 46
Seems the breakout is being supported by volume density, particularly in the latter half of the session. Considering the first half looked like nothing but down, that's some turnaround.
 

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ChartMan

Legendary member
5,580 46
Lots to see today in volume analysis - mostly commented on the chart. Good steps on the 5's again. I think we can say that the rise has been well supported on volume and so should be sustained. After hours still holding at 900 and I guess this must be a major psycological descision point. Looks up to me and heading for my suggestion of 940, but play it as it comes. :)
Post script. On the 10 min ES, TA doesn't seem to be supporting this move....
 

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ChartMan

Legendary member
5,580 46
The pre market had suggested up....but that didnt wash and down we went, bumping the 5's. Small ray of hope in the PD towards the end of the day.
 

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ChartMan

Legendary member
5,580 46
Up 140 on the week and consolidation establised. Will there be another test of 8300 to estabish firm ground? Will there be one more cycle to produce a bull flag. For this answer to this and lots more, see next weeks episode of...
 

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