US and Euro stocks mounting one more rally before crashing?

Thank you. There are signs of potential exhaustion in DJI as well - a harmonic pattern forming under a key level, together with Money Flow Index (volume-weighted RSI) divergence

More simply put, there's been more selling than buying this week, yet price ends the week at a high.

Further, the 4 hour candle starting at 10 am Eastern Time has been a high-volume red candle every day this week, including Friday.

A trader pm'd me asking what exactly I meant by ' still unconfirmed ', so I thought I would share my reply to him here for the possible benefit of others.

" It means that although there is a lower high on the MACD ribbon, it still has an open end, it hasn't crossed to the downside yet. Now by the time it has on the H4 chart, it is often too late to enter unless you use a very wide stop, as it is a lagging indicator, but the formation is there. The way to trade this is to go down to a much lower tf and trade off of that. So what I'm saying is that in this example, the big tfs are giving us a warning of what may unfold, but we need to go down to the smaller tfs to capture the move with a smaller stop if it looks as if the diversion is going to hold. I would say looking at the Dax that the Asian session on Sunday or the morning session on Monday may see Dax move higher to around the 300-320 level at which level the diversion will still be in place. I've got some lower time frame resistance around this level, so we'll see if it can hold.

If it does hold, then it is a very strong diversion pattern, and we could see Dax coming down as much as 200-300 pips before it finds solid support. "

Just a quick word, because that's all it's worth, about quality of post on this or any of my threads. I welcome all opinion and most criticism of anything I post, but when someone comes on, with no apparent motive except to troll, as a certain 'BreakDastops' did recently, then I put them on ignore, it's as simple as that, which means under that name they will no longer be able to comment on any of my threads. Such unprovoked verbal abuse will never be tolerated by me.

" When a horn's gonna be deep in your arse then you'll admit that you were wrong?" Ignored member, BreakDaStops.

well done cat when those trolls verbally attack you it is time to get rid of them.

So this Dax diversion I mentioned above, I'd expect Friday's high not to be broken if it is going to hold today, but Draghi is coming up at 2pm UK time, so anything is possible.

Hi Cat - an interesting thread.

I've found KiwiOz's Price Projections which are based on work by Tom DeMarc quite useful.

This one from last week on my hourly Dax chart ( posted elsewhere ) illustrates this.

Another based on this morning's M5 chart projects 11,292 which is also today's Camarilla H3 level at an approx 70% retrace from Friday's high.....

Let's see what the NYSE Open and Draghi bring....

Regards

PS the high so far this morning is at the 61.8% retrace and around several M5 fractals from Friday. The M1 and S20 charts showed clear intra-day sells for those of us who trade the short ID swings. With the 5 day ADR now down to 119 pts its hard work banking reasonable pts!

Thanks Islander above, good to hear from you again and nice to know that you're still alive and kicking!

Without wanting to turn this into a Dax thread, You will see iof you are trading or watching the Dax that the price has been rejected just below its 61.8% from Friday's high, and combined with the diversion I have already mentioned, this could be significant. There is still plenty of support though, namely and firstly the 10m 200ema level which was supporting it this morning, and then further down at 210, the 15m 200ema and sma combined. It's a Draghi day though, so always uncertain when he talks, but technically, we could get a nice little drop from here down to I would say 090 or so, so best really if anyone is already short to move to BE asap.

Indeed I am and active in a small room of Dax and Dow traders where we continue to use the ideas that were developed in my old thread with Medici - glad to see that you too are still posting away M

To move away from Dax, here's my hourly chart for Dow which we find often provides a nice alternative to the currently lethargic Dax...

Dow is currently in the middle of Friday's range...

Good to see you too, Captain


Completely agree


And under Thursday's highs...

Dow currently poised for a bit of a drop I'd say, though how big not sure. I have my Daily 200ema pressing right down on top of the price as resistance, and H4 like the Dax is on very clear diversion with the MACD ribbon. May not hold though, and if it does, I still think there is a strong possibility for the Dow to move higher up towards 25,000. We'll see.

Agreed, the downside seems more likely. But very sluggish at the moment. Time for a walk in the sun

And here's an interesting piece from CME this morning:

https://www.cmegroup.com/education/featured-reports/equities-six-ways-to-spot-a-flagging-bull-market.html

ps...if Dow does lift a bit, I've got potentially very strong resistance between 700-750.

Dax has indeed found its 15m 200ema/30m 100sma. Atm as expected, it is finding some support here, but if it can break below it, then it should easily have the selling strength to reach the 30m 200ema @ 1,166, which sits on top of today's S1 pivot level, which should also provide some support. though this can easily fall further than this towards 080.

This is not becoming a Dax thread, promise, and I've run one of those in the past anyway.

The action started half an hour earlier than usual with a big increase in volume in the 14:01 gmt candle - especially in NQ... sold NQ & Dow....

PS: both are now under their respective hourly 200 SMAs which are starting to roll over...

Earlier than that on the Dax, with those lovely ripe 10m shooting stars around 10am. Big MACD diversion on the 1m tf, and the short was on, at least to this level.

Both Dow and NQ have found support ~their half #s ( their 50 pt sweet spots). With NQ's fall of over 100 pts in an hour - that's almost its current 5 day ADR - I've banked and watch from the sidelines

Its always good to find a reason for an unexpected move.....this fits in nicely with Medici's CME post yesterday


https://www.dailyfx.com/forex/market...nes-Lower.html

Good morning

Yes, at the same time technicals rule. There won't be any serious move down before SMA200 on the hourly has rolled over.

I had a lot of people tell me I was wrong a year ago when I sent this to a few investors I know and some close acquaintances with hedge funds. dated January 31st, 2018.

One has to be very careful when sending this kind of stuff to certain people, especially when millions of dollars rest upon the decisions that are taken or not taken, but we techies, although we're just sit at home traders, do know a thing or two about what the markets are doing, but because we are this strange species that prefers the confines of our own little private world to the big circus beyond, few people take us seriously.

" Last night was Donald Trump's first State of the Union address, and in it, as expected , he spoke of America's 'booming' economy and the soaring US Stock Market which , from the very first day he won the Presidency, has risen meteorically in the biggest stock market rally in history, though in fact, it did actually begin back in March 2009 when the lows were reached following the 2008/9 financial meltdown which really gathered pace with the collapse of Lehman Bothers in September 2008.

Ironically however, on the day of the State of the Union address, US Stocks had their worst day since Trump won the White House, falling nearly 500 points, a pretty big single day fall by any standards.

The recent almost frenzied buying of US stocks so far this year is a sign, though no more than a sign, that this remarkable bull run may, and I stress may, be close to running out of steam.

Time will tell, but this is one of the very first signals of an impending correction analysts look for - signs of exhaustion at extremely overbought/oversold levels, and this month's potential ' Death Throe ' candle ( the highest white bar you can see on the chart ) which is far longer than any monthly candle previously, is a potential early indication that the stock market may have peaked, or be close to doing so."

I had a question the other day from a trader who follows my threads about divergence following my warning I issued on Friday about the Dax H4 divergence. " Can it be used on the smaller time frames to form a strategy "? was the question, to which I replied that because no indicator can be relied upon in isolation, one must have other indicators which help confirm whether you think the market is about to move one way or the other, because to rely on just one, whatever it may be, cannot be relied upon to be consistent, one has to have a much greater overall feel for the market than that, so knowing where the S&R is relative to the price, trend lines, moving average positioning if you use them, etc. But diversion can give you very good trade opportunities on any time frame if you know which diversion is positive and which is not, ie, likely to work.

Take yesterday, we had the big H4 diversion, which alerted me that yesterday, the chances of the market falling were high. Off of the London open, there was a sharp dip, followed by a rally which took the price up to what I had was a high possibility resistance level, namely the 61.8% fib retracement from Friday's high. When the price paused, one could have shorted immediately, or, one could have waited for more confirmation on the small time frames, which is what I always do. This came on the 1m tf when the price put in a higher high on the 10.22am London time candle, setting up a nice diversion with the MACD ribbon. Once this had confirmed and the price began to drop, one could have shorted right there, or, one could have waited for a final confirmatory signal which is a bearish candle, as there usually is one, and yesterday if you look at the close of the 1m 10.30am candle, which was a powerful shooting star, this was a great signal to short on.

Thought I'd mention this, because these are ways you can recognize warning signs on the higher time frames, and follow these up with signal opportunities on the smaller ones.

I normally keep such posts for my trade academy thread, which I haven't posted in for ages incidentally, but thought I'd throw this one in here as it might help a few people.