Thursday, January 21, 2010

Top40 end of day chart

Today Top40 closed 1.61% down at 24823 and that was biggest single day drop from 26. November 2009. This drop can easily bring sleepless night to bulls but as it stands tonight up trend started the 3rd March 2009 is still intact.

Today close was exactly on trend line that is at the same time bottom of the rising wedge formed from the 3rd March. If we have red day tomorrow most likely wedge will break and target for that move is down to 21000 or some 3800 points or 15.3%. Off course nobody can expect to be straight line drop.

There is significant support just below 22000 (black horizontal line) but still far.

Indicators are not painting nice picture. Macd is in triangle formation but showing quite bad negative divergences. There are four recent tops in August, October, November 2009 and January 2010 not confirmed with MACD. Stochastic is very low around 20 but as we know stochastic not working well in trending market and can be overbought or oversold for quite some time.

At least we can look forward to increased volatility that will help us with our trading system

Trade with trend!