SDOW (3xShort Dow ETF): Bullish Watchlist

By: TheWaveTrading | Fri, Apr 11, 2014
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Reason: Potential Inverted Head & Shoulder with theoretical target at 33.

In the daily chart below we can see that price has formed a likely IHS, although the right shoulder would look better if price "works" sideways a bit more before breaking out.

The positive divergence and the bullish cross of the MACD (In addition to the histogram above the zero line) are favouring a break out of the sideways pattern developed since the beginning of March.

SDOW Daily Chart
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If we zoom in the shorter time frame we can see that Wednesday's Inverted Hammer (Usually a "bottoming" candlestick) has been followed by yesterday's sharp advance. The negative divergence of the RSI (5) should suggest that this is not yet the breakout move, instead it price could consolidate a bit before the kick-off.

In a strong up trend usually the 20 dma should hold, anyway as long as yesterday's lod is not breached the bullish pattern will not be busted.

Therefore the idea is no to chase price higher, instead wait and if there is a pullback, probably in the area of the 20 dma step in with a stop below yesterday's lod.

Since next Tuesday I will be on holiday I will not get involved.

SDOW Daily Chart 2
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Yesterday I learned an important lesson that I wont to share:

I decided to anticipate the setup with a tight stop so I bought it at the open but instead of letting it go, without a technical reason, I suddenly sold the position because I was filling sick. So if you don't fill well and you are trading leveraged ETF do it only if you have a sound reason but afterwards push the stop button shut down the computers and go to bed.

 


 

TheWaveTrading

Author: TheWaveTrading

TheWaveTrading

Contact: If you would like to contact the author, you can e-mail him at thewavetrading@gmail.com

The main objective of this project is to share my views on several markets and asset classes.

In the initial stage TWT website will be a free service.

My main focus will be the equity market with SPX being the leader but I will also follow US equity sectors, major European indices, fixed income, currencies and commodities markets.

My analysis is based upon traditional Technical Analysis, Elliot Wave guidelines and investor sentiment.

My goal is to establish the most likely path that the price of a particular asset will undertake and profit through ETF instruments both on the long and short side and mainly with leveraged ones (2 x & 3 x).

The advantage of ETF investments is that it allows getting involved in equity indices & sectors, currencies, fixed income, commodities etc.

Therefore the main purpose of TWT will be to establish investment strategies regardless if the market is in an up trend or in a down trend, leveraging the chosen scenario while managing the risk by establishing protective stop losses.

Hence I will always define the risk, I will try to let winners run the wave and I will cut the losses if my strategy is wrong.

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