By Chris Diodato
Last week was pretty uneventful to most portfolios. I took some losses as I watched my options decay, and otherwise, I was bored too. However, notice that some significant candle formations began to form. First, the shooting star pattern in the Dow Jones.
This is typically a bearish pattern. Of course, we want to wait for a breakdown.
What else? Notice the long red candle from last Tuesday. All three proceeding days after that day were bound within that single day’s range. This now creates a pattern called a “falling three methods.”
Once again, this is a bearish pattern, but we must wait until confirmation.
So, speculating right now, if the falling three methods plays out, that means that tomorrow or Tuesday will be accompanied with a large drop in the major indices. At 11 PM EST, right now, I already see the trendline of the past three days being broken through on the Dow’s futures chart.