I’d been planning on writing a post similar to this if we rallied today. Made reference to it while we were at the lows of the recent leg.
This was intended to be a TA post, and it will be, but defying staggering odds in the headlines today are posts about bird flu.
I’m not going to play topical expert on the internet, that role is well filled, but bird flu is said to be …. rather bad. Kill rate of up 60% relative to the Covid 3%.
Human to human transition is rare. Let’s hope it stays that way.
None of any of the following analysis is based on the expectation of developments in this. It’s just weird it hits the news the same day I wanted to write this post.
I will also say most sources quote this as having come from the Daily Mail (And it’s on their site) - and the DM …well, it’s not the most reliable source.
Anyway - here’s the TA post.
First let’s set the scene.
Around 4800 we started to talk about the upside spike risk to around 5200 area.
If this was valid, any trading above the 5200 level would be a spike out. We’d expect to see price return quickly to the support. Which happened a couple days ago.
We’ve now bounced off support but this can happen inside of a dead cat before a break.
The above is exactly what happened in the run up to the Covid break. We dropped early in the week (Covid was in the headlines at the time but no one really cared much) and then we rallied up to the high late in the week. The rejection of the high was made on Friday.
Here’s what it looked like:
And the current chart looks the same as that did.
Obviously we do not know if anything will happen but we can efficiently plan for it at this time.
Read this post first if you’ve not already. It does the heavy lifting for the strats we’re going to cover here:
Nailing a Downtrend: Planning and Trading Each Section. (substack.com)
So our obvious area of interest for the short/reversal is the 76. Simple stuff, we’ve covered how it works and fails 100 times.
If the high attempt fails, then we have the ABC legs of a pending butterfly in. Our big decision level becomes the 1.61.
Again, covered this break pattern so many times. If you don’t know it, read the link above.
And that’s how we establish our simple entry, stop and initial target/break levels.
Now let’s get into how we’d target and strike selection if you want to take lotto bets on this break forming.
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