Still trying to decipher what Tuesday's action meant. Yesterday added a few clues. Two things that jump out at me are a Last Engulfing pattern and a Broadening Top. Both are bearish.
Last Engulfing is a candlestick pattern that "is found after an extended bullish trend [and] represents the bulls final attempt to drive the market higher. If one is long and a Last Engulfing Bullish pattern forms, one should identify a protective stop level near the lows of the Last Engulfing Bullish pattern to protect any profit in the trade." Definition here.
A Broadening Top means one thing to me (the only thing I ever remember about it): a market out of control. With the amount of political risk in the market surrounding the EFSF nonsense, this feels right on.
As I said yesterday, I'm still positioning for a 3-leg move off the 1074.77 lows, so neither event changes this stance. I'd like to be a buyer under 1175 and a seller higher (as internals weaken). No need to get more in depth than that at this point. Not feeling an edge either way.
Below 1175 may be a little much to ask for, I realize. I'll be watching the area just below 1191.48 too, which is the lower trend line of the pattern thus far.
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