REVERSALS
Since 2009, there have been several occurrences where the price stayed/dipped below the rising “200SMA” as I have annotated with the blue boxes as below. We can see that these occurrences were bottoming price-action, not crash signals, as the market did establish new all-time highs just several months after. So the big question is, will we bounce back up and establish new all-time highs this time around just like it did in 2010, 2012 and 2016?
I have highlighted 2010 box because it resembles today’s price-action pattern, and also 2010 was the quickest recovery compare to 2012 and 2016. So let’s zoom in and check it out.
INVERTED H&S
Here you can see I have zoomed in 2010 price action and today, where we have pretty similar price pattern (known as inverted H&S pattern). No pattern is 100% guaranteed in the market but it begs to revisit what happened in 2010, especially for the fact that, in 2010, price also did dipped below the rising “200SMA” as you can see above (arrows).
Neckline is the horizontal red box, and the shoulders and the head have been annotated with purple. For this bullish pattern to fully confirm, bulls want to reclaim the neckline area and hold above it and continue to advance. After the full confirmation in 2010, market did gain 20% in just 5 months. Can the bulls do something similar today? I still want to give benefit of the doubt to the buyers realizing that we are still in a primary term uptrend, and for the fact that, last three occurrences (blue boxes above) they were a bullish reversal signals.
Rising Pivot
Below chart is from 10/30/18 which I’ve shared on my twitter feed. As of today we are still holding above this level.
“Trend is assumed to be in effect until it gives us a clear signal that it has been reversed.”
Weekly Chart from 10/30/18
Learn more on Inverted H&S
