Thoughts on the US equity market...
Weekly gain/loss: - 206 points
Weekly closing price: 21865
US equities declined in value last week, consequently breaking a two-week bullish phase. The move, influenced by escalating tensions between the US and North Korea, wiped out the majority of the prior week’s losses and very nearly formed a weekly bearish engulfing candle! Providing that the bears remain dominant this week, we could see the index revisit weekly demand pegged at 21462-21645.
Looking down to the daily candles, we can see that price is now trading within a stone’s throw away from a channel support line etched from the low 20494 (which fuses with a 61.8% Fib support at 21733 taken from the low 21462) . If you overlap both the weekly and daily charts, you’ll notice that the channel support is in fact located a tad above the demand seen noted on the weekly timeframe. Therefore, a fakeout through the channel support line to the top edge of the weekly zone could be something to keep an eyeball on this week!
A closer look at price action on the H4 timeframe shows the unit closed the week just ahead of a channel support line extended from the low 21273. The trouble here is both the H4 and daily channel supports are positioned relatively close together. Also of particular interest on the H4 scale is August’s opening line coming in at 21913, which is currently lurking above current price.
Our suggestions: In view of the technical landscape at the moment, we initially believed that the H4 channel support will likely suffer a minor fakeout, as traders may press for the daily channel support and its converging 61.8% Fib support for long opportunities. However, seeing as how close the weekly demand is located below the daily channel support, we may be in for an even deeper fakeout than originally anticipated!
When anticipating a fakeout, we tend to always attempt to trade the extreme! And in this case we believe the extreme to be the top edge of the weekly demand at 21645. This may seem a long way off at 220 points from current price, but if the trade comes to fruition and does indeed prove to be a fakeout, the payout could be huge! As for stops and take-profit levels, this will be decided if and when price approaches our buy level. This is where patience comes into play, traders!
Data points to consider: No high-impacting events scheduled on the docket today.
Weekly closing price: 21865
US equities declined in value last week, consequently breaking a two-week bullish phase. The move, influenced by escalating tensions between the US and North Korea, wiped out the majority of the prior week’s losses and very nearly formed a weekly bearish engulfing candle! Providing that the bears remain dominant this week, we could see the index revisit weekly demand pegged at 21462-21645.
Looking down to the daily candles, we can see that price is now trading within a stone’s throw away from a channel support line etched from the low 20494 (which fuses with a 61.8% Fib support at 21733 taken from the low 21462) . If you overlap both the weekly and daily charts, you’ll notice that the channel support is in fact located a tad above the demand seen noted on the weekly timeframe. Therefore, a fakeout through the channel support line to the top edge of the weekly zone could be something to keep an eyeball on this week!
A closer look at price action on the H4 timeframe shows the unit closed the week just ahead of a channel support line extended from the low 21273. The trouble here is both the H4 and daily channel supports are positioned relatively close together. Also of particular interest on the H4 scale is August’s opening line coming in at 21913, which is currently lurking above current price.
Our suggestions: In view of the technical landscape at the moment, we initially believed that the H4 channel support will likely suffer a minor fakeout, as traders may press for the daily channel support and its converging 61.8% Fib support for long opportunities. However, seeing as how close the weekly demand is located below the daily channel support, we may be in for an even deeper fakeout than originally anticipated!
When anticipating a fakeout, we tend to always attempt to trade the extreme! And in this case we believe the extreme to be the top edge of the weekly demand at 21645. This may seem a long way off at 220 points from current price, but if the trade comes to fruition and does indeed prove to be a fakeout, the payout could be huge! As for stops and take-profit levels, this will be decided if and when price approaches our buy level. This is where patience comes into play, traders!
Data points to consider: No high-impacting events scheduled on the docket today.
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