Even though we had a downtrending price bar yesterday it was a Key Reversal Day (KRD). It certainly was a volatile day! A Key Reversal Day in a downtrend is one where the market opens above the prior day’s close, makes a new low, but closes above the prior day’s close and the current day’s open. The downward price pulse from the 11/16 high ended at yesterday’s low and we have a new upward price pulse developing from that point.
Adding to the bullishness of the KRD were more technical “buy” signals! Today’s chart shows the bullish divergence between price and Wilder’s RSI. This signal was registered at the close after we made low in the upper part of the target zone identified on the weekend post of November 10-11. On November 8th I wrote “My next Fibonacci clusters are at 1461-1463 and then 1413-1417. ... From the recent high I have Gann Wheel targets at 1469.5, 1459.5, 1437, and 1421.” Yesterday’s low was at 1419.28. You can see these targets on today’s chart.
So, we had a KRD with technical buy signals in an area of the chart previously identified as support (Fibonacci and Gann cluster). Finally, as presented yesterday, we might also be in the latter stages of a Terminal Impulse pattern.
Based on this technical evidence I will be placing a buy stop order on the SPY at yesterday’s high. However, I will cancel this order if we make a new low first; and this is certainly possible as I note the GLOBEX futures are down over 16 points as I type this!
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