It has the feeling of a busy week coming up for the market but I’m not sure that it will be huge in a directional sense – not that being ‘sure’ of things as a trader necessarily adds up to much. Watching the theme today it seems to be very much a ‘risk-off’ open with selling pressure getting pretty aggressive on everything against the USD. Chalk this up to an event where everyone expected one thing and the opposite happened – i.e. QE3 = weak USD – this was an almost universal opinion – but I guess the market had other ideas. On my Monday trawl of the global markets today I have seen lots of interesting charts but this one on First National (FHN.US) stuck out as a good-looking Gartley setup but also quite a solid-looking proposition based on the state of the indicators:
As you can see from this daily chart there has been a peak formed at the Fib cluster that I have marked ‘C’ (being the C in the ABC wave formation). The peak of this is now representative of the failure point for this setup and of course just a few cents below where many traders would be placing their stop-loss orders.
As you can also see the RSI has done a nice roll over and we are crossing on the MACD which suggests that there is some slowing in momentum being witnessed there. Typically traders will be looking for an initial profit target mid-way between points X and B – if we get to that point we can consider it further in subsequent posts.