Daily chart for S&P
Daily chart for NASDAQ
On Friday, we’ve got the 200+ points drop on the Dow that I had been expecting since Thursday. The market went more or less straight down the whole day and closed below their 20 & 50 day moving averages and their upper MOBO bands. This caused all 3 indexes to form ice hole failures at the 50 and 200 day moving average. It also formed a ugly looking evening star candlestick pattern which indicates a trend reversal down.
Currently, this downtrend is still looking strong to me. We are making lower highs and lower lows without any bullish divergence. This means that the possibility of a 3rd wave down is still high. This would be at 950 on the S&P.
PS: I just remembered something that i learnt from David Elliot. He discovered a reliable candlestick pattern called the Shanghai Duo. Its a doji followed by a hanging man (this would be a hammer for a downtrend reversal) with confirmation the next day. It seems that all 3 indexes closed with this candlestick pattern on Friday.
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