It is Monday again, but the days feel as though they are blending. If I didn’t have to put the date at the top of the page, I am not sure I would know what it was.
We will whip through our symbols and then have a deeper chat about Apple than we normally would.
S&P 500: This index is still in a downtrend. The price and the 8 EMA are moving above the 55 EMA.
Bitcoin: We have a short trade in on the stock market proxy GBTC which we shall cancel. This reinforces the concept that we place our trades above resistance and below support. The price has started to move up.
Oil: The price of oil still shows a downtrend. It has stalled at support around the $8 level.
USD/EUR: This currency pair is still in an uptrend. The stock market proxy, EUO, has been rebuffed by resistance, but not enough to stop us out.
Gold: Still in an uptrend. We have a long trade ready to go in the proxy UGL. We need a little more upside to trigger us in. Should that happen a chart and details will appear.
Apple: Let’s take a look at some other aspects to analyse the Apple chart.
First of all, I have placed a Fibonacci retracement on the price movement. The down leg can been seen to have rebounded to pretty much exactly .618% which is what we would expect it to do. The question now is can we figure out what it is doing next? Using our moving average crossover system as with others, the bigger picture doesn’t affect us that much. I thought it would be an interesting exercise to take a look at a couple of technical analysis techniques.
So, from typically following a rebound of about 62% of the down leg, we can normally expect a zig zag pattern to be completed by another down leg of the same severity as the first one. In the Elliot Wave parlance an ABC correction of the uptrend. My alarm bells go off if the price continues to rise and exceeds 70% of the down leg.
We now look to the RSI for confirmation. Most people use the RSI as an overbought oversold indicator which I don’t find particularly helpful. This is because there can be an overbought or oversold condition for a very long time before anything changes with respect to the direction of the price.
I look at the RSI as an indicator that tells me if we are in a bull or a bear market. I learned this method from Constance Brown. I see Apple in a bear market if the RSI reading remains between 20 and 60; a bull market if it is between 40 and 80.
If you look at the chart above you will note that the recent rise in Apple has not caused the RSI to rise above 60. If you look to the left you will see that while Apple was in a bullish rise the RSI bounced between 40 and 80. Now we have 20 to 60. So if we were to put some shekels on this, I would expect Apple to decline in price.
I will go short if the moving averages instruct us to do so per the MO of this blog.
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