Monday, January 26, 2009

Market Monday's

Click on all images for a larger image

While I usually don't use line graphs, this one helps to quiet the noise on the candle charts. Let's break this chart down into three areas.

1.) The initial big collapse in prices. Notice that before this drop prices moved slightly lower, but didn't simply drop; at point 1 on the graph, prices dropped like a stone. Also notice the volume moved higher on the downward move, indicating people were getting out of the market in a big way.

2.) Price continually moved lower, essentially trying to find a bottom price. here prices were continually moving lower.

3.) The upward sloping channel where prices rebounded from from their move lower. Prices have broken through the lower band of this upward sloping formation.

Note that prices have not reached the previous lows established on the three moves lower in stage number 2.

Notice this chart uses exponential moving averages, meaning the more recent prices are more important. Notice the following:

-- Prices are below all the EMAs

-- The shorter EMAs are below the longer EMAs

-- All the EMAs are moving lower

All of these points indicate the market is in a bearish orientation

Also note the following chart

The MACD has hit a peak and is moving lower