Sometimes these charts can be so cute that is almost hard to believe, but since this is just a blog and not real life we can discuss them and see where it goes. I have emphasized over and over that Wyckoff considered even the smallest penetration of support to be significant. Last Wednesday the market made the slightest of upthrusts on very heavy volume. On Thursday the market penetrated its previous low in this trading range. This lower low marks a tentative downtrend. Yesterday's rally tested the upthrust and today with no follow through marked this as a lower high. By our little algorithm we are now potentially set up for a sharp move down.If we now turn our attention to the 5 minute bar chart, the large red bar at 91.75 is heavy supply. Further with the move to 90.93 price penetrates the previous support, setting up a potential downtrend. The rally to 91.74 is a lower high confirming the possibility. We now penetrate the previous support at the black line and a test follows. The sharp move down comes on schedule and the first rally off the sharp decline is again a safe place to short. We have now seen the same sequence three times in a row. Let's see what kind of follow through we have tomorrow.
