Of course the fact we have to remember is that from October to January the decline is of a larger degree since we have lost over 18%. This tells us that the larger degree trend is bearish.
Therefore rallies from the January low should be treated as counter trend rallies.
If this is the case then we can look to upside resistance for the short term coming in at various levels. These are as follows:
12454, 12614 – 707 and 12916 -960.
These are retracements taken from two major highs and can be considered as upside objectives on a daily timeframe.
Whilst the UK FTSE had reached an almost perfect price level to confirm a possible low, the Dow Jones had not satisfied the price objective. We noted that we had two price levels in mind which came in at 11525 and 11395. The latter being the key objective.
At present, we have a print low at 11634 which could suggest that there is still further downside ahead. We also are in negative territory as far as momentum indicators and moving averages are concerned.
If the low of 11634 reads as an Elliott Wave three then the low of Wave two 13092 should not be breached and also suggests that there are choppy trading weeks ahead.
I still believe that the current volatility is providing ample opportunities for short term day traders and should do so for the next few weeks.
If we can stabilize between 11395 – 11525, watch bullish bar setups to indicate a short term turnaround. Below this we have 9871 as a major bear target.
Sandy Jadeja is Chief Market Strategist for ODL Markets and founder of www.Spreadbettingtowin.com where he teaches low risk trading strategies and money management.