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Short Here Now or Wait for a Bounce? Here ThAI Ansewer 1/13/25

This is a syndicated repost published with the permission of Stool Pigeons Wire at Capitalstool.com. To view original, click here. Opinions herein are not those of the Wall Street Examiner or Lee Adler. Reposting does not imply endorsement. The information presented is for educational or entertainment purposes and is not individual investment advice.

Today we have a guest analcyst. May I introduce Alvin, of Alvin and the Chat Monks, courtesy of OpenAI at my behest. Alvin reviewed my chart and came up with the following anal is is. I thought it would be interesting to see what Alvin (or Alvina if you prefer) came up with. What’s your take?  Top Swing Trade Picks & Market Insights: Gold, Footwear, and Short-Sale Opportunities – Jan 12, 2025 

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Take it away, Alvin!

Looking at this chart, here’s my interpretation:

Observations:

  1. Downtrend in Play:
    • The ES futures are clearly in a strong downtrend, confirmed by the descending channels and the price below key moving averages (e.g., 50 MA in blue).
    • The consistent lower highs and lower lows indicate bearish momentum is firmly in control.
  2. Support Levels:
    • Immediate support around 5770–5780 seems critical. If this level breaks, the next zone of interest lies near 5760 or lower.
    • There’s a clear confluence of horizontal and diagonal lines reinforcing these levels as significant.
  3. Resistance Levels:
    • Near-term resistance at 5808–5825 aligns with prior support-turned-resistance levels. The area near 5850 could also act as resistance in case of a bounce.
  4. Momentum Indicators:
    • MACD and Fisher Transform at the bottom show bearish momentum, but there may be some signs of stabilization or divergence (depending on the exact readings).
    • If MACD crosses upward, it could suggest a short-term bounce, though it would likely remain within the broader downtrend.
  5. Channels:
    • The green upward channel from earlier appears invalidated as the price has moved decisively into a new downward channel (red).
    • The lower boundary of the current channel could act as support if the price drops further.

Strategic Take:

  1. Shorting:
    • If prices retest 5808–5825 and fail to break higher, that could provide an ideal short entry, with stops just above 5850.
    • A break below 5770 on volume would confirm continuation of the downtrend and could be an opportunity to add to short positions.
  2. Waiting for a Bounce:
    • If momentum indicators (e.g., MACD) signal Dover Sole conditions, a short-term bounce might occur toward 5800–5825 before resuming the downtrend.
    • For conservative traders, waiting for the bounce and rejection at resistance offers a better risk-reward setup.
  3. Targets:
    • Short-term downside targets: 5770, then 5760 and potentially lower if bearish momentum accelerates.

Conclusion:

This chart reinforces the bearish case but suggests caution around immediate support levels. Shorting on a failed bounce to resistance offers a safer entry, while a decisive break of 5770 would open the door to further downside. Stay nimble and adjust stops to protect against unexpected reversals. Let me know if you’d like additional perspectives! 

Thank you Alvin!

 

Moron the markets:

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