Bulls take control as Italy fears fade .... knowing your candles

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Derek  31 May 2018

Morning,

International:
The bulls took control again as Italy fears faded. Another classical example how markets can over react on the slightest uncertain news.

US and the East all positive.

The S&P500 bounced right back into my flag again. This one day fear we ignore.



The one index that did not even close below the EMA8 line was the NASDAQ. Notice how it is busy breaking the top of its flag.



It helps to know your candles to catch early signals. Bank of America made a Hamari candle that implies that the immediate preceding trend is concluded. In this case, the negative trend.



JSE Technical:
As usual, the JSE over react more than any index in the world with any news. Most shares just corrected as investors sold due to the fear created.

Shoprite went against the trend and made a very bullish piercing candle. Notice that the trend line is not broken yet. I show another interesting pattern on this chart that repeats itself very often. The share made a correction, then went sideways for a few weeks, the correction then continues and usually the same distance as how it went into the sideways movement. I marked it on the chart.



Case study DCP:
The fear did not escape our case study either. It however did not correct to the low that FrontRunner predicted. I now drew a new trend line on the chart that is closer to the EMA8 line. We want the EMA8 and trend line to be broken before it is bullish. See the previous posts how we have been following Dis-Chem for the full story.



Enjoy your day.
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