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Price Reversal Manifests at Technical Levels
Price did what it normally does, and the bulls are back in control.
This is a quick post from my phone just to recap the week. I’ve included links to prior articles for you to refer to. Dive in on them! If you read my newsletter enough you’ll start to realize there’s only 3-4 tools I use ALL THE TIME. Eventually you’ll know exactly how to think about the market with just a quick glance at the charts.
Price action recap
We saw price approach a major technical level of Support and Lower Bollinger. We also saw fear peak this week signaling a bottom is etched in.
Price Bounced at Support
Remember support is a price level where many buyers step into the market. Support lines are drawn horizontally across charts. When traders see price approaching those levels, they buy, manifesting a “bounce” — exactly what happened this week.
Reversal at Bollinger
Bollinger Bands represent how far price has deviated from its historical moving average. The upper band represents the average +2 standard deviations, and the lower band represents minus 2. When price is trading outside 2 standard deviations in any direction, expect a sharp reversal — exactly what happened this week.
Technicals Confirm Each Other
The combined technical levels of support and Bollinger strengthen a potential move, because more traders act on it. I personally prefer Bollinger, but if price happens to be at support as well, I go in a little heavier knowing there is extra buying power (or a more solid price floor). We also have confirmation of a bottom from the Volatility Index… the fear index.
Fear Index Peaked, Reversed
Fear in the market peaked as well, a major and very reliable signal that the move lower is over, and short term bias is up.
The best part of all of this was an intraweek reversal. Recall intra period moves on any time frame represent a very dramatic shift in control between bulls and bears.
Cliffhanger: Europe News
For now I’ll leave you with this — the reversal we saw on the charts this week was very dramatic, signaling that a major move higher in the coming week(s) is highly probable. The bulls are squarely in control. Then again anything can happen with more bad news out of Europe. Following up with charts soon.
Enjoy your weekend. If you’re anything like me, you’ll be slugging enough coffee to get some heart palpitations 😂