Thursday, December 15, 2011

Not buying it

Today produced an inverted hammer which is a bullish reversal candlestick and better fitting when levels in the market are oversold. Inverted hammers show that buyers rally prices up at some point in day but encounter sellers which cause for a pullback or consolidation. The selling pressure is the wick of the candlestick and can often be twice the size of the body. It indicates that selling has diminished and buyers hold prices at the lows of the day. However, the indicators of today's action did not support the positive close in the marketplace. The MACD Histogram indicator produced a downtick which represents prices favor bearish implications. The RSI below 50 validates a lower high from the 1292 peak in the SPX. The RSI will now find resistance at the 50 level if the market sees a short-term bounce.

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