The important resistance levels are tested: Bear might have it.
Early to tell but feel much more bearish. Here's expansion on bear trading plans.
Following: Could be a critical week for the bear case. (substack.com)
This is the big decision point. In the previous newsletter we went through various different risks there are for bears and bullish contingencies. This is the area in which we’ll see if indices can break the bear trend, or if we’re into the top of a big bear market rally before a larger bearish breakout.
Case skews heavily to the bear side right now, but it is making various assumptions on how big candles will close which may not be correct. If they are, the bullish stuff may have been a massive over-preparation, but I think it’s better to be overly concerned than complacent. The paranoid survives.
Let’s look at a couple big charts.
The purest 76 strategy rules here would say DJI has made a bull break here. We need to give it a bit more tolerance. If it’s going to be a big move, overshoots do happen. But we need to see it reversing inside of this zone.
Looking only at the DJI rally here is intimidating to bet against, but if we look at things in a broader context, we have really high risk:reward in this area. Our stop area is very well defined and in previous DJI highs of the year we’ve had similar spike outs - the trade after them being a painless short.
I’d not want anything to do with the short a bit higher, but if we get a rejection from this zone - there could be really good shorting opportunities starting now.
SPX has always been inside of a big potential butterfly pattern. Can forget about those when it’s chopping about, but the price action around these levels has become very interesting. We’ve made a head and shoulders on the 161 fib with our high before the 220.
If we reject from these highs, there’s a very good chance we’re going to make new yearly lows. And I think if we make new lows, this forecast from when we first made a really big bear break may come to pass. If I happen to have this all right (Big if), we could be somewhere in the highlight area.
Forecast: Short DJI as it hits the 161 of March for TVC:DJI by holeyprofit — TradingView
Real move:
This could be a really good spot for positioning for a big bear move. With a strict stop above the invalidation levels mentioned. Above there, all bear risk could be parabolic. A high made in this area, would be very positive for the bear trend continuation case - And if we’re in the middle of the trend, things pick up speed in the second half.
If you’re a paid member, continuing reading for more on possible bear swings expected, bounce areas, re-load areas and way to trail stops.
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