“Since breaking the Dow theory of higher peaks and troughs we have continued to slide and bar one decent day this week the Bulls have been absent from the market. We have a Trend Resistance line that comes in at 831.75 for today’s action and it would take a breach of this to ease some of the current pressures. In the other direction we will need to watch our recent low at 797.50 very closely. If this were to give, especially on a Friday where one would expect some profit taking, then it would not bode well at all for the S&P”.
Friday gave us another Dragonfly Doji. As with the same pattern last week this requires confirmation.
Indicators in play
Trend Resistance Lines are probably the most basic and easy to understand tools in Technical Analysis. Its just a matter of joining lower highs together with two and some prefer three points of contact.
A Dragonfly Doji occurs at the bottom of trends and is made up when the market opens, trades a decent amount lower and then recovers to close back up ideally at the exact opening price. This is a reversal pattern.
Summary
We will be taking our finger off the sell button for the moment after Fridays bounce back. We have our two lines in the sand at 831.75 and 797.50.
