Is It The Much Awaited Reversal?

One Day Reversal Candlestick With Bearish Divergence

Chart 1

Major U.S. indices closed down on Tuesday August 8 2017 after S&P 500, Dow Jones Industrial Average, NYSE Composite and Wilshire 5000 Total Market Index made all time intra-day highs. They also closed in the lower half of the day’s range. This does constitute as one-day reversal candlestick pattern. The question is whether this will persist for longer time.

The SPDR S&P 500 ETF, SPY, made a bearish divergence (Chart 1). On August 8, the rice made high but oscillator technical indicators, Stochastic, RSI and MACD did not.

The Decline Started Before War Game Talks

Chart 2

One factor cited for the market decline on Tuesday was the newest episode of the worsening rhetoric from politicians regarding North Korea’s nuclear program. However, the decline in the market started before that as the 5-minute chart shows (Chart 2) .

The high was made at 12:10 PM and was accompanied by bearish divergence as Stochastic made lower high. The first leg of decline lasted till 1:00 PM. The bounce faltered at 1:20 PM. The next leg down lasted till 1:30 PM and the resultant bounce failed by 1:45 PM. By 3:00 PM, SPY had already erased all the gains and was negative for the day after making all time high. The reversal was already in progress before the news release.

 

Related Reading:

Trading Places (Ws)Trading Places (Ws)Great comedy movie. The chacters you can relate to. It was a funny movie. Plus it comes with a lenticular cover hard to find in the US.
Technical Analysis of Stock Trends, 6th EditionTechnical Analysis of Stock Trends, 6th EditionThe universally acclaimed investor's classic has now been updated with the latest data and references. With more than 800,000 copies in previous editi... Read More >
Trading: THE BEGINNERS BIBLE: This Book Includes: Day Trading, Options Trading, Forex Trading, Stock Trading Beginners Guides To Get Quickly Started and Make Immediate Cash With Trading (Volume 1)Trading: THE BEGINNERS BIBLE: This Book Includes: Day Trading, Options Trading, Forex Trading, Stock Trading Beginners Guides To Get Quickly Started and Make Immediate Cash With Trading (Volume 1)TRADING: Tips and Tricks for Beginners: Day Trading + Options Trading + Forex Trading + Stock Trading Tips and Tricks to Make Immediate Cash With Trad... Read More >
Technical Analysis of Stock Trends, Tenth EditionTechnical Analysis of Stock Trends, Tenth Edition

Sixty-three years. Sixty-three years and Technical Analysis of Stock Trends still towers over the discipline of technical analysis like a mighty re... Read More >

Print Friendly

Leave a Reply