Midas_Analysis'  Instablog

by David G. Hawkins

We're in the early phases of a major downtrend on several timeframes. I'll take the time here to identify the ladder of supports below where price is now and to carry forward those levels to the shorter timeframe charts.

Long Term - Monthly Bars Chart

The monthly bars chart is the first one here. Since early 2009, there's been an overall uptrend, including two large pullbacks, and now the beginning of a third. So far since March of 2009, we've had a succession of higher highs and a higher low, so this is an uptrend. But notice the most recent high; it didn't quite get up to the 1440 resistance level established by the early 2008 high before it started turning down. The second high (early 2011) was much higher than the first one (early 2010), but now this third high is only slightly higher than the second. This indicates that the uptrend is weakening, and indeed may have topped. To me, it looks like it doesn't have enough energy to get up to the all-time high set in 2007.

Let's identify the ladder of supports under the current price. Notice that the Highest Resistance Curve (red) and S3 are at the same level now, about 1245, only slightly higher than the Fibonacci level of 1240. These three together are a very significant cluster of supports. The next major area of support is the pair, S1 Cal. and the next Fib level, around 1120. We'll carry all of these levels shown here over to the next chart.

Intermediate Term - Weekly Bars Chart

The second chart there is the weekly bars chart. At the time of my last post here, price had just poked below S2. Now we see it has pushed all the way down to Old S1. The purple level marked HR/S3 is the level of the combination of the Highest Resistance Curve and S3 from the monthly bars chart. Notice that on this chart, it's also coincident with the Old Left S1 support curve, so this is indeed a VERY significant support level. Now, look down to Mnthly S1 Cal. and Fib, around 1120, which are also copied from the monthly bars chart. See that there's also another curve in this are, Old S1. So, this cluster of supports around 1120 is also VERY significant.

Short Term - Daily Bars Chart

The third chart here is the daily bars chart. Last post, I had put in the Arms Price Projection (blue lines), but noted that as yet there wasn't a pull-up in the downtrend to which to fit a BottomFinder. Now we see that price broke down through Weekly S2 and Weekly S1, then supported right at the curve launched from 10/4/2011, bouncing up a ways before turning down again.

I've now fit a BottomFinder (BF) to this pull-up in price (purple), and it is 38.2% complete. The projected horizontal location of its end is at the vertical dashed purple line, which is substantially further out than the end of the Arms Price Projection (blue dotted vertical line). A BF which is much less than 50% complete often isn't very accurate, so we'll just have to see how this one evolves.

Yesterday (June 1), price came down hard and stopped exactly at Wkly Old S1, so a bounce up for a few days would be probable. But overall I think we're in for far further on the downside, at the very least until getting to the Price Projection end, the vertical blue line. A that point, we should be in the vicinity of that strong cluster of supports, HR/S3 and Wkly Old Left S1. A rise from there should carry for awhile, but a break below would mean much further downside movement, probably as far down at that next major cluster of supports around 1120. By then we'll probably be at the end of the BF.

(click to enlarge)

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