Tuesday, July 31, 2007
Trading Education
Tutorial
Pattern Cycles: Reversals
No chart pattern better illustrates this slow
evolution from bull market to bear decline than the Descending Triangle. Within
this simple structure, the trader examines how life drains slowly from a
dynamic uptrend. Variations of this destructive formation precede more
breakdowns than any other reversal. And they can be found doing their dirty
deeds in all time frames and all markets.
But why does it work with such deadly accuracy? Most traders don't understand
how or why patterns predict outcomes. Some even believe these important tools
rely on mysticism or convenient curve fitting. The simple truth is more
powerful: congestion patterns reflect the impact of crowd psychology on changes
in price and momentum...
Read
More...
Trading Education
Tutorial
Courtesy of
Nirvana Systems
Breakaway Gaps
Pressure Helps Identify Movers
Gaps occur when there is a dramatic change in
market conditions. They can occur at the beginning of a trading session (i.e.
most NASDAQ stocks) or even during the session itself. There are three types of
gaps that are of interest to us when we analyze charts: breakaway, measured
(also known as continuation) and exhaustion gaps. Today we will discuss the
breakaway gap.
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NASDAQ Chart of the
Day
Courtesy
of Nirvana Systems
GOOG looks to be forming a large
head-and-shoulders pattern with a neck line (support) at 498.80. A break
through this support level could spark much bigger weakness ahead, likely
toward a target of about 460.
Daily Trading Signals
NYSE Chart of the Day
Courtesy
of Nirvana Systems
ABX has turned up from the 38%
Fibonacci Retracement level after pulling back from last week's highs. This
stock could begin to get more buying attention from this level, especially
given the overall market weakness at this point.
Daily Trading Signals
Daily Market Commentary
Courtesy of
Nirvana Systems
Updated Monday, 7/30 for Tuesday's market.
|
Key DOW Levels for 7/31
|
|
UP
|
None
|
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DN
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Below 13,200
|
Bounce From Lows...
- Dow bounces just above key 13,200 support,
rallies 93 points. The index proceeded to bounce from this level and eventually
closed the day with a nice 93 point gain. We could see a bit more short-term strength
moving forward, but longer term weakness is still likely.
- The NASDAQ and S&P each bounced from early lows to end the day nicely
higher. Look for more range-type movement within the current consolidations
until a breakout occurs.
Summary
The Dow ended the day with a nice gain and continues to hold above critical
support. However, the index will likely trade sideways-to-up until the larger
H&S pattern is ready to deliver.
Read More...
