More of the Same
Both yesterday and today we set up five point ranges that could have been called rectangles, but if you’ll check your technical analysis books you’ll see that the volume is supposed to significantly decline during the pattern. That isn’t happening.
This morning we dropped to the bottom of yesterdays “pattern”, came back up to the top and “broke out.” And reversed. That was a potential trade, turning down at the 127% external retracement of the morning drop. It matched a divergence in the Stochastic, and formed another Wyckoff Spring entry.
You’ll find many examples of the Spring using the search box in the right panel, and the most recent one happened yesterday. They are basically breakout failures. When the market breaks out, it is supposed to continue — not reverse back through support or resistance. It often leads to a tradable move in the opposite direction.
The exit was yesterday’s low where we started sideways again. Notice the divergence that said further downside activity was unlikely. Divergences don’t always work, but when they confirm some other potential turning level it’s a good idea to pay attention.
