Figure 1. QQQQ/ weekly
I previously mentioned that the "this time is different" scenario occurs on a weekly close over the high of a negative divergence bar. Negative divergence bars between price and momentum oscillators that measure price indicate slowing upside momentum. In anticipation of a market top, traders will take positions as these negative divergence bars begin to appear. My research shows that a weekly close over the highs of a negative divergence can lead to an accelerated price move - hence, our moonshot - and it is my belief that this is due to short covering as traders cover losing positions.
For shorts and those on the sidelines, this continues to be a tough market.
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