I am not a financial adviser so you should not take any part of this blog as being financial advice. Observing and interpreting charts is a hobby and so is this blog. The information in this blog is just my opinion, it may not reflect reality. Stock market investing is risky - you can lose all, or potentially more than all of your money given certain market conditions. Not only can you lose a lot of money buying shares, you can also lose a lot of potential profits by selling shares at the wrong time. So please do not buy or sell shares because of information in this blog. Whether you buy or sell shares is your decision as is the decision when to buy and sell. Do not risk any money you cannot afford to lose. Do not risk any money if you do not fully know and understand what you are doing.

Monday, July 25, 2011

'Big black' points to rocky week ahead

We have seen this pattern several times in the past few months. The market starts a promising rally and then reverses sharply with a big black candle i.e. a candle which opens on its high and closes on its low.  The close today below Friday's low on the All Ords indicates that further falls are likely this week. What's also happening now is that the market appears to be 'winding up'. This is evident from the higher low and lower high recently formed. Such 'winding up' is often followed by a sharp move. Which way that will go is not yet evident but the simple fact is that there are no weekly signals pointing up and as of today, the daily signals are pointing down including that the Stochastic is now in overbought territory. So I would have to say that the evidence favours the bears and that at this stage the only thing the bulls can rely on is hope.
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