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Tuesday, September 15, 2020

Market cap losing 50DMA is a bearish signal

Market cap losing 50DMA is a bearish signal


  • In an uptrend, index needs to be over 50DMA (orange)
    In 2019 rally, 50DMA was not retested
    In March, 2020 rally, 50DMA was briefly lost
    In a downtrend, index will drop below, retest and get rejected from 50DMA
    50DMA lost in July 2019, retested 2 times in July and August
    50DMA lost and retest failed in March 2020 crash
    Index needs to drop below 200DMA as final confirmation (see Nov 2015)

Conclusion: Uptrend ends when there is a big red daily candle below 50DMA, 2nd confirmation is a retest of the 50DMA and rejection. This happened after June 2019 top and Feb 2020 top

Observation: We have a major daily red candle cut through 50DMA like butter. Expect a retest like prev 2 times and that will be a great short opportunity with min target to 200DMA
LTF shows 5 waves are done, so a move to 323B (0.382 ) or 333B (0.5Fib + 50DMA)

Expect a drop to
260 B - 200DMA
236 B -0.382Fib
200 B - 0.5Fib
175 B - 0.618Fib

Invalidation: Breaking above and staying above 50DMA

-Bearish below 50DMA
-Expect retest and rejection at 50DMA
-Final bearish confirmation below 200DMA

from Trading Ideas
via gqrds

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