GS 7/8 (5-min Chart)
Apparently there was more than short-covering that went on yesterday. The bulls and bears REALLY fought.
Dow fluctuated wildly - it was a choppy market from session open to around 2:30am EST.
As far as GS was concerned, sellers continued to have an upper hand at the open,and found support at the base of the "box range" in my weekly chart (refer to my weekly analysis from Jul 8) - at around 167. A bullish morning star then sent GS up.
GS' climb didn't see it reversing the trend set by the evening star (formed 5 mins after session's open). It did however, succeed in moving price up to Fib level 50%, before it was stopped by a bearish harami/ inside bar, a doji and a hanging man.
From there, GS dipped below the support from previous day's hammer, rallied (2nd rally) back up again to resistance set by previous day's 2 spinning tops.
The 2 shooting stars that formed at this top served to reinforce the resistance (which should become a strong SUPPORT in the session/s that follow, as and when GS pulls back) set by the 2 spinning tops . The validity of this resistance was proven when the 1st rally stopped below it, and again when the 3rd rally stopped at around the level of the first.
Basically, GS traded sideways / in a range until a break out of that box range happened after a series of positive news in the market, including oil's pulling back to hover near 135.9, stabilizing home sales, favorable news from various companies, etc. Finance sector really performed and GS went up steeply for 20 mins after 2:20am EST, and then steadily til session closed.
My trades yesterday were 2 puts bought on GS' decline at the open. As market was erratic, and my indicators were showing mixed signals, I merely sat to watch the very interesting attacks and counter attacks (yes, I'm intrigued by candlestick patterns) that went on when GS was ranging.
Truth is, I had really wanted GS to fall through support, so I can buy a put (because despite what I said about it going up for the week, I just can't get the image of that grisly bear out of my mind! So there's no way I'll be confident holding a call position), only to remember what I said in my pre-market analysis about it showing signs of bullishness (bullish hidden divergence suggesting continuation of upward move that began on Jun 12), and that it should trend with the market. But market was sending mixed signals well into lunch, and oil was going up. Didn't expect the market to go into positive zone, and with GS gradually showing signs of reversing to an uptrend, what I saw was a lack of good reason to continue to trade for the day.
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Pre-Market Analysis for Jul 9's session
GS Daily Chart
Yesterday's price low was lower than that of the previous day's, while MACD's histogram has become less negative.
What this is telling me is that I can still depend on my blue channel for support and resistance. Profit taking will likely continue, and more buying is possible should the positive market sentiments prevail.
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