The past week produced declining action for the U.S Stock markets, Oil and the Euro and in last Sunday's update many were waiting for the start of last week to kick off but at tradingmarketsignals.com we were waiting for Friday's close!
Recap of last week...
When the Dow Jones sat at 10700 the hype of the recent upward action had many analysts, traders & commentators expecting the last 300 point push to 11,000 to come alive! At tradingmarketsignals.com we weren't so sure and although we were actively participating within the markets we were eagerly awaiting Friday's close from a weekly charts perspective. With it we already had the chart below mapped out in which we warned that for the buoyancy and upward complacency to continue, we would like a close above 10740;
The resistance for the Dow Jones sat at 10600. The market is now 100 odd points higher so does this mean that the upside probe to 11,000 is valid? Not at all and this is because if you look at the weekly action the market needs to close above 10740 for real validation.
Highs above this and a weekly close below the level would still leave the market with upside convincing to do whilst at the same time the market can still keep it's possible downside objectives alive.
In every sense of the word it was job-done for TMS & its members as the expected decline was mapped out before it occurred in which on Friday's close the Dow Jones sat 300 points away from 10,000 not 11,000!!!
August Week 3 begins! - Where now for the Dow Jones, FTSE100, Pound, EURO & Crude Oil?
Dow Jones Four Hour Chart
Why do we use Four Hour charts? Well firstly the timeframe isn't of laggard nature compared to slower time frames like daily and weekly charts. Secondly the chart produces more defining action as each candlestick represents four hours of market action and smaller timeframes can be a nuisance to pinpoint turns as the price action is faster as more candlesticks pass by. Lastly we find that the four hour action throws out significant turns with pure ease as action is more meaningful.
If you look at the chart above you can see that the market currently stalled at the 10700 mark but we also pointed out this area on the weekly chart and that is why it's important to look at other timeframes in order to evaluate moves in the bigger context of things.
For now the four hour chart clearly shows an ugly-ish drop but at this point in time it's not the end of the world - not yet anyway! The market CAN still turn around back to the highs - TMS is not saying the market WILL turnaround as we will analyze things from an unbiased perspective as that is critical in the identification of uncapping consistent gaining trades.
However as we have said previously the market can stage the next move of 350 odd points up OR down and with it we have potential of a complete turnaround or the printing of 10,000.
This is why the market continues to sit at a 'fine line' situation. The chart above is clear and concise! We have three lines of SUPPORT that meet at the same point which gives the potential of upward action. Snapping the three lines would be detrimental for the upward action that has occurred over the past month.
Lastly the upward action can easily occur but there is a possibility that it will be to wrong foot the crowd to lull them into a false sense of upward action belief for the 10700 mark. To watch out for this the market must simply take out the red line in relation to the four hour chart above as rallying below this level could prove very dangerous. We would also like to address that the weekly chart is also showing 10535 as a critical mark for upward probing action for the week ahead.
The fine line verdict is simple: Snap and fold or hold and rally!
British Pound Four Hour Chart
For the chart above a clear rejection was given to the 160 mark for the Sterling and signs of exhaustion were delivered when price action was around the 159 mark.
The signs were correct and the rejection was provided and with it the TMS system racked up 219 points!
Once again the situation is pretty clear & concise. We have the interaction of two support lines at the same area in which the GBP.USD must hold 15550 to avoid further downside. To break the recent decline the market must take out both red lines so that a real bounce or rally can occur and with it 157 must be removed as well.
The fine line verdict is simple: Snap and fold or hold and rally!
Euro Four Hour Chart
From the chart above it should be apparent that the upward move from the 11875 is not dead - Not yet anyway!
This is because the four hour chart above shows that although the Euro fell over 500 points from its high the lowest blue line is the trend line that is still intact from which the Euro has rallied around 1500 points from it's low!
With this rising trend line we also have two other support lines that are holding the market for the moment. The Euro however is in trouble and can easily double the decline of last week. Not only does it have to hold the current area it also must take out the red line that it has been failing from late last week! Should this occur then moves above 130 will likely occur in which the highs would be within touching distance. The verdict for this currency is no different to the other markets:
The fine line verdict is simple: Snap and fold or hold and rally!
Crude Oil Four Hour Chart
Crude Oil has produced a hefty 800 point decline from the highs of $83 and if the decline is not to continue to $71 the blue line must offer support for the market as it did at $75 on Friday. The market has become oversold and over extended in a short period of time from which bounces would be likely. No bounce will be good enough to send Crude Oil back to the highs unless a real upward conviction move can take out the two red lines pitched currently at $77.
The fine line verdict is simple: Snap and fold or hold and rally!
FTSE100 Four Hour Chart
In our opinion the FTSE100 has not performed too badly over the past week as the market is not sitting too far from the red pivot line.
The orange rising line shows where the FTSE100 problems were occurring at and with it the market was running out of steam! However over the past four weeks the red line has been acting as a pivot line and regaining this area, just points above 5300, would put the highs back in play.
It would be equally important to hold the rising blue trend line so that the 5000 mark can be avoided.
The fine line verdict is simple: Snap and fold or hold and rally!
My name is Ajit Singh and my work with the financial markets started from the young age of 17! We are www.tradingmarketsignals.com and so far in August our TMS system has gained 512 points from five major markets: Dow Jones, Euro, Sterling, FTSE100 & Crude Oil.
www.tradingmarketsignals.com - Weekend Membership Special: Please note TMS has an annual membership special which is open until the end of August 2010 BUT this weekend we're issuing a special reduction of $40 for 20 members only open exclusively for our safehaven.com audience - ends on the 16th
http://tradingmarketsignals.com/#/tms-annual-membership-offer/4542738012
