We did register a buy signal on the daily chart, but the weekly chart hasn’t generated one, and the monthly chart is on the verge of making another lower low. The Trend is downwards. You are here reading this newsletter for a specific purpose, and that is how you can use technical analysis to make high probability trades.
The highest probability trades are made by trading with the overall trend, finding the channels they are in and recognizing when the trend has changed as quickly as possible. Trends are interrelated upon different timeframes and are fractal. If the biggest fractal is going in one direction, what could possibly lead us to believe that the smaller parts could make a significant move in the opposite direction? I’m not saying that it won’t rally from here, just that the probability of such is lower. Imagine if a trader could recognize the channels and be patient enough to only wait for prices to touch peak trendlines of channels before going short in downtrends. Take profits at trough trendlines of channels or strong horizontal support and then wait patiently in cash until another high percentage trade comes their way. To reenter a position in the direction of the trend that horizontal support breaks and the trader would go short again or he waits even longer for a retracement to a peak trendline before he enters.
Everyone must trade to their own personality, but also must trade to the tune of their own resources and find their own timeframe. This is true, but regardless of a person being a swingtrader, daytrader or long term investor, they should want to get in at the best price and get out at the best price with the least possibility of a drawdown. With technical analysis, that means finding those resistance and support points and having the patience to start your trade as close as possible to them. Also, trade in the direction of the trend with a definite target in mind or stop out as quick as possible if your line is breached with confirmation.
1065 and 1073 are the next overhead resistance lines, 1050 and 1043 below.
Disclosure: "no positions"