Below is my bearish argument...
Below is a daily chart of the ES. This Fib Extension (1:1) was one way of determining the recent low at the 676 area.
Using the same technique as above, we are currently at an interesting level on this rise up. Also, notice we are around the same pivots level as in February 2009.
Another way we could've predicted the recent lows is using the Fib Retracement method as shown below. Also, notice the large divergence in the oscillator (red waves) compared to price action. This was a sign we were due for a reversal.
Using the same technique as above, we have the chart below. Today's high's hitting the 50% retracement level.
Let's take note of an interesting point about the above chart. The recent market action has a repeated pullback, rally, pullback, rally, in a relatively short amount of time. Below is a chart from the July/August 2008 timeframe where we saw similar action... then a steep fall.
The chart below is still the
2008 timeframe where we try and see how we could've predicted the high of that Jul/Aug rally. We went back to the last rally where the stoch went from
oversold to overbought, from the last wave up and take a measurement (small, blue arrow to the left). Almost exact 1:1 movement! This technique is similar to what we did above with the current market action.
Below is the weekly Nasdaq (NQ) with a bearish setup.
Below is the weekly DJTA ($TRAN) also with a bearish setup. However, it would be nice if the oscillator and stochastics pulled back a bit more.
Lesson