Not to be undone by failed breakout

Good day all,

My past few posts on general market direction has been towards the bullish side. True enough, the days came when major indices pushed through consolidation range tops. Sadly, sellers came out of the woodwork and pressed markets down. So, what now?

If you look at the STI chart, the selling pressure I referred to was the one that pushed the STI below 2650. Thank goodness we bounced back up. Strictly speaking, that have been considered a break towards the downside. But, seeing how we came back up quickly, I will stay with my opinion of the STI forming an inverted head and shoulders. So for now, the picture looks okay or the STI.

Now for a look at US indices. I will take the Dow Transports and Nasdaq Composite charts for illustration.

In the charts below, you will see the consolidation ranges that I am talking about highlighted in purple. The green arrow at the end of the boxes signifies the breakout out of the ranges. Then, I was quite glad with the market’s movement. Hope grew in me as I saw the green numbers on ticker tapes. Following that, the market started consolidating again (in yellow shades). I told myself this was no big deal, and it will probably be followed by a stronger surge up again. Disappointingly – and as usual actually – the market showed me it was not going to make life easy for any trader; the market fell by enough to make me start doubting my analysis. The last week comprised of news of Europe getting closer to cooperation from the big nations – which should ensure a little more certainlty in that region – and positive unemployment news from US pushed markets higher. Now, US indices are back to flirting with the 200-day MA. I can heave a sigh of relief for now, but of course, seeing indices get out of this whole level would be better.

 

So with that, I will continue looking for more upside.

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