S&Ps made new lows late last week, early this week. As I noted earlier on my blog, I was expecting some consolidation, which did occur, before a move lower. The latter part did not happen. US equities decided to go upward & closed the past 2 days above the previous low 1040.50. This rally was overdue, per the RSI indicator as it was below 30 (want to thank a reader of this blog for noting RSI from an earlier entry). Once it goes above 70, then a downturn should be expected. The note should be made the over sold area on the RSI is more dependable then the over bought, as it can (and will a lot) continue upward.
One might look at that & easily think we have hit a bottom. Not so fast, there is evidence in the technical analysis we are headed over.
- Up day in a down trending market on light volume, more volume for a period of time needed
- 38.2 is the first level of retracement
- Below, but approaching a upper trendline.
- RSI is at 59.
There is no telling if the market will resume it’s down trend tomorrow (it could, does not have to reach the 38.2 fib or touch the trendline) or next week. If I had to make a prediction, I say it touches at least the 38.2 fib before going lower, but as a short term FX trader, I trade what is in front of me.
This weekend, I will try to do some FX analysis. I meant to do so this past week, but time did not allow.