After an emotional week filled with many vocal people on Twitter talking about where the market is going… I must say, I prefer to look at unemotional charts.
Therefore, I am focusing more on the horizontal lines. The first line of defence comes in at 5.9k, and the next area is around 3.1-3.5k.
On the back of the Ichimoku cloud it wasn’t a total surprise that we dipped lower after the China spike. The lower band of the cloud matches nicely to the 5.9k level.
I am not a big fan of moving averages, but I thought since a great deal of traders are talking about it that I would take a closer look at the 200-day EMA (exponential moving average – orange) and the WMA (weighted moving average – blue). To my surprise, I do not see the price having crossed either one of them to the downside (at least not on the calculated model used by TradingView).
I will keep an eye on them for the next few weeks and month. I am especially interested in it in combination with the Ichimoku cloud, which shows a steep incline of the lower band just around year end.
Still, to turn this bearish sentiment into a more neutral one, we need to take out 7.5k and then 8k. If you are a short-term trader, you can only short this market with a stop just above 8k.
Long-term traders should have their bids ready again at around 6.5k and possibly even around 6k. Another strategy could be to sell your longs now and wait to collect them back at lower levels, and if that’s not going to happen, have a stop-buy in the system above the 8k level.
All bets are off for the longs if we go below 5.9k.
The topside to watch is at around $200. A clear break will get some fresh bullish momentum into this battered market. Strong resistance will come in at around $300 and later on at $380.
I do not see a particular move to either side. It is time to play the range and be ready to trade on a breakout to either side.
The general wave structure is bearish and will stay that way until we trade above $65.