Here is a break from your regular scheduled crypto program to look at a chart that is fascinating to me- the DJ:DJI chart.
This is a weekly chart (longer time frame than I usually use in crypto), but boy has it been technical so far. It is zoomed in so you can see it, but take my word- textbook Elliott Wave pattern. Starting at our pivot low in 2009, we had a bullish 1 wave, retrace of the 2 wave tapping the .382 fib, also target on a hard 3 wave, retrace to tap the .382 again on the 4 wave, and now we are in what I'm calling an "extension of the extension" of the 5 wave. We have passed through 2 traditional also targets (possibly simply due to a really strong economy right now in my opinion) but we have hit what I'm calling as a loose top.
We have a double bearish divergence, both in RSI and in volume, denoted by the black arrows. For those that don't know, a bearish divergence is when you have an increase in price, but a decrease in a momentum indicator (like RSI) or volume. In this case, we have both- strengthening my bear case here. When I originally charted this, I thought the "top" would be the 3.618 extension level (bottom of the purple box) but I'll allow up to the 2.618 extension (from a different level, creating a box confluence) as my reasonable top zone. If we make it into the red box above that, I'm calling for (not financial advice) a red alert profit taking opportunity. An extension in an extension of an extension is like seeing how long your ice will stay ice in a steamy Arizona July. Here is a hint- not very long.
The DJ:DJI is over-extended, and based on traditional technical indicators is even far beyond over extended. No matter how good we think the economy is, remember- this is a whale driven market that is designed to take your lunch. Don't let it!
Stay frosty.
-DY
This is a weekly chart (longer time frame than I usually use in crypto), but boy has it been technical so far. It is zoomed in so you can see it, but take my word- textbook Elliott Wave pattern. Starting at our pivot low in 2009, we had a bullish 1 wave, retrace of the 2 wave tapping the .382 fib, also target on a hard 3 wave, retrace to tap the .382 again on the 4 wave, and now we are in what I'm calling an "extension of the extension" of the 5 wave. We have passed through 2 traditional also targets (possibly simply due to a really strong economy right now in my opinion) but we have hit what I'm calling as a loose top.
We have a double bearish divergence, both in RSI and in volume, denoted by the black arrows. For those that don't know, a bearish divergence is when you have an increase in price, but a decrease in a momentum indicator (like RSI) or volume. In this case, we have both- strengthening my bear case here. When I originally charted this, I thought the "top" would be the 3.618 extension level (bottom of the purple box) but I'll allow up to the 2.618 extension (from a different level, creating a box confluence) as my reasonable top zone. If we make it into the red box above that, I'm calling for (not financial advice) a red alert profit taking opportunity. An extension in an extension of an extension is like seeing how long your ice will stay ice in a steamy Arizona July. Here is a hint- not very long.
The DJ:DJI is over-extended, and based on traditional technical indicators is even far beyond over extended. No matter how good we think the economy is, remember- this is a whale driven market that is designed to take your lunch. Don't let it!
Stay frosty.
-DY