Thursdays are a great day to observe how the final day of the week may close out by looking at the daily and weekly candle setup into Friday. As the markets have started 2019 with everything but a “bang”, more downside looks to be possible based on the current setup that has returned big downside within the current price channels.
$SPY: Daily Candle
- The backtest is showing a top out on price in the middle of the megaphone channel with low volume on this last move up off the support trendline.
- The Vortex indicator is showing signs of a reversal as it has had this same setup two other times within the channel.
- The Williams %R is moving down from overbought levels which has shown more downside left in past moves similar to this. Once this becomes oversold, it will be time to look for positive divergence near the channel support below. If price breaks down through this line, the %R may become irrelevant as emotion starts to move the market rather than technicals.
- The MACD is showing signs of a bearish kiss with a possible bullish cross fake-out. Tomorrow will decide which way this is going.
$QQQ: Daily Candle
- Similar to SPY, the price of QQQ is having trouble breaking through the middle of the megaphone price channel here with a strong candle showing sellers in control.
- The vortex indicator is in a prime spot that has returned hard moves down in the past with the VI+ converging towards the VI-.
- The MACD recently crossed but looks to be a bull trap as it has already started to roll over to the downside.
- The %R recently moved down from overbought conditions with room to move down more into the oversold territory.
$XBI: Daily Candle
- As with the last two ETFs, the price of XBI is trading in the middle of the downward sloping price channel. In this case, the price channel is more parallel than a megaphone.
- The Vortex indicator is set up very similar to the last time price rolled over on the daily chart.
- The MACD recently crossed and is still technically bullish as the fast (blue) moves above the slow (yellow).
- The Williams %R spiked down hard out of overbought levels with plenty more downside left to potentially test oversold levels below.