Thursday, August 19, 2010

Harami reversal confimed today


Yesterday I pointed out the potential harami reversal pattern, and today we have the reversal confimed. Also, it did seem that some smart money front ran today's jobless claim and Phily Fed report. It is a big trending day today and SPX traded to the support area of 1060-1075. You can see how many times this area is tested in the chart.

Since April, SPX index has been testing 50 day MA from below for 4 times. The previous 3 times, it failed twice. The thirt time it got well supported from the above mentioned level (1060-1075) and bounced back above the 50 day MA. Can it be lifted above the 50 day MA again this time? I doubt it!  Why? There are tons of reasons, I will just mention a few of them. This time SPX index never closed above 50 day MA, the area above 50 day MA is an obvious island and the harami reversal is confimed with powerful force today. What do we need to be 100% sure that the equity is going down? We need to see the 1050-1060 break with decisive power.

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