Danger In The Equities Market, Massive Sell Off May Occur!Hey Traders, there has been some significant selling in the equities market over the past week leaving the Dow down 7.5% in 6 days! On the chart above, I have labeled a few Major structure levels. For those of you who have gone through my How to read structure tutorials- we can clearly see that price has been trading within a range for a long time. That range was recently tested by the new higher high labeled on the chart above, and the test failed propelling price in the opposite direction. Since then, price has produced a weekly lower high followed by a break and close below the previous low. This leaves us with a weekly lower high, lower low situation. The next probable move would be a small rebound creating another lower high- If another lower high is created on the weekly chart, fear will surely pick up amongst Investors and there is a good possibility that we may witness a Major sell off from that point.
This is purely structure analysis and nothing is confirmed yet however the recent price action shows all the characteristics of a market that is potentially reversing. If the market is to continue this way, and we receive confirmation of a reversal, I do not see how the markets will recover without a significant correction of at least 20%. For many years, people have been calling for a market crash, economic collapse, and so on however my analysis has always pointed towards trouble in the markets at the end of 2018 through 2021. If my analysis is correct, a market correction would occur throughout 2019, 2020, and possibly 2021. In this scenario I do not see the markets beginning to recover from these losses until at least 2021-2022. This analysis is based off of many different fundamentals, regarding interest rates, economic data, short term/long term cycles etc. Fundamentals only provide an outlook and are better used to determine a relative time frame for certain events, Technical Analysis however, can be used to help narrow that time frame. Judging by the current technicals, it appears as though we may be entering/approaching an Equities bear market. As for economics, I am not going to comment on that now in this post however I will touch on that subject in the near future. For now I am interested in seeing how price action unfolds over the next month or so as it will be revealing!
Lets see if we can get a rebound on Monday up into the 23,000-23,500 level before a further sell off. If we do not get a rebound, then we may be looking at a famous "Black Monday".. The last scenario that could unfold is- price makes its way back up into the trading range (between the major previous high and low) and trade within that range for awhile. In my opinion the first scenario of a rebound and then sell off is the most likely to occur, while the last scenario is the most unlikely to occur. I hope this post is of value to you. If you would like me to post more on this subject please let me know in the comments section below. Please leave your feedback in the comments as well and give this post a thumbs up if you agree and/or it was helpful to you.
