COMMENT FOLLOW UP 2/23/13

Piet had the following comment. As it is public, I took the liberty to post and offer some commentary:

I found it hard to decide about a bear or bull start. B1 and B2 were bull bars. Was a break of the low of B2 a sell? I drew a trendline over the tops of B1 and B2. My first sell signal was the top of B8. The close of B16 was te second sell signal. Rejection of the low of B274 and MA. Then I drew a bull trendline using the bottoms of B21, B22 and B23. The open of B29 was a buy as the tow bar doji of B26B27 had no follow through and there is support from the ema's as well horizontal support of the 1506.50 level and my bull trendline. I adjusted the steep bull trend line after B42. I drew a line over the tops of B29 and B32 and a parallel line using the bottom of B32. Then the open of B50 (after the small doji) was a buy. I had a horizontal support line at the 1508.50 level. The doji of B68 and B69 did me think of selling. I adjusted when thinking the bull movement was not over. Nevertheless I did not recognize live the 2 bar doji of B71 and B72 as possible buy. Also I had a bull flag on TREND TRADING: ONE MORE LOOK 2/22/13

Bull or Bear?  All Break Out Target (BOT) lines have been removed to clean up the chart to make it appear as any chart would look.  We have a support and resistance level prior to the US open, as well as a bear trend line.  The B1 range is the magenta lines.

MY READ:

At the open we were in a pull back from a bear trend sell off out of the support/resistance level.   Also note the bearishness in the 20EMA  which was pulled to the 1508 area at the open.  The problem with Bar 1 and 2 is the wicks that hit resistance in the pre-open zone.  With B1 at the bottom of the zone, there was a 1 point upside to the top of the range.  Not much to work with, and B2 could not push past the resistance.  Q1: Was a break of the low of B2 a sell?    I say yes,

Part 2:  I added square markers to draw your attention to an important area:  the space between price and the EMA (or a TL).  Price (bar lows) are pushing away from the EMA/TL.  The market is selling.  Taking a short at the top of B8 ( My first sell signal was the top of B8. ) was a good play.  B8 failed at the B1 range and the EMA.  Your second short at B16 was good as well.  Price was stopping at the B1 range (1507).  It would be reasonable to think B16 would continue the bull B15, but it failed.


From your bull trend line ( I drew a bull trendline using the bottoms of B21, B22 and B23 )  note the square markers:  a gap between the EMA and the tops of the bars; BULLISH.  (see follow up question)

COMMENT to additional Question:  top of bars to EMA gap is bearish and bottom of bars to EMA gap is bullish (as you indicated). I like to look at the "Bottoms-bear/tops-bull" as well to see if price action is pushing away from the EMA.
Since we were discussing the bull, look at the area of bars 22-32. We have "tops" pushing higher, but "bottoms" are some what stable on bars 26-32. Is there a bull gap? Yes. That is ok by itself. Just add top reads too. Bars 37 to 43 are rising and we have a strong bull gap. but look what happens when price begins to stall at the tops. A pull back at minimum, a reversal when a market change occurs.

All in all, your reads are getting better.  Congrats.

CM