Saturday, May 5, 2012

The Dow 30 - Ichimoku Study - Week: 30 April to 04 May, 2012 -

.....Regulars can skip below and go straight to the chart......


We do a weekly Ichimoku study, to complement our 'Triple Screen Technical Analysis', of the markets that we track, in our quest to master Technical Analysis.

When taking the 'weekly' time frame, to use the Ichimoku Cloud, we need to consider the following..

The standard settings for an Ichimoku Kinko Hyo chart are 9, 26, 52 and are used on EOD charts.  
When Ichimoku was created back in the 1930s, a trading week was 6 days long.  So we have one and a half week(9), one month(26) and two months(52). 
Now that the trading week is 5 days, we should actually use 7,  22 and 44 instead. 
However, the majority of systems, worldwide, still use the old settings 9, 26, 52. 

We need to study markets, on a weekly basis on this Blog.  
How do we fit 52, 26 and 9 into that need?  With one candle being one week?
There are 52 weeks in a year, 26 weeks form two quarters (or a half year) and 9 weeks equal about 2 months.  Fits the old logic - albeit differently.
Presto, we have a longer term view with the same settings!

So, if you like to move off the beaten track, for a change... do read on...

Quick Reference : 
Chikou Span - purple line,
Kijun Sen - blue line, 
Senkou Span A - black line, 
Senkou Span B - grey line, 
Kumo - grey shaded area,
Tenkan Sen - red line.

Useful resources (free) from the Web:

DJI 30: Medium Term View (or) Week Chart (or) EOW with the Ichimoku Cloud:  
DJI 30 - End of Week Chart - 04 May 2012  
Last 6 Signals seen on DJI 30 - Week Chart (EOW) marked on chart above:

1. Senkou Span Cross: Neutral Bullish Signal (S)
2. Chikou Span Cross: Strong Bullish Signal (C)
3. Tenkan Sen/Kijun Sen Cross: Neutral Bullish Signal (T)
4. Kumo Breakout: Bullish Signal (B)
5. The Flat Kumo: Bearish Signal (Ko)
6Tenkan Sen Cross: Strong Bullish  Signal (minor signal - see arrow)

'1'. Price crossing the Tenkan Sen (red line) is considered as an early warning sign of sentiment reversal. 
The Arrow points to last week's candle which has stayed above the Tenkan Sen. So our signal marked '6' above remains valid for this week too.

Conclusion is same as pointed out last week, 'Bulls are still all over this screen. Bears need to get Index below the Tenkan Sen, to have a chance of taking this one over.'

S&P 500 - Triple Screen 'Technical Analysis' - Week: 30 April to 04 May, 2012 - 'Three Inside Down' effect.

Learnings from the Past Week:
Our Analysis last weekend (click) ended with the note "The Candle pattern, that this month is forming, is a vote for the Bears. Shall be studied on month close."
We studied this pattern at month close (click) and concluded that below 1398, the Bears get a shot at the, Bearish "Three Inside Down" candle Pattern, on the Monthly Screen.
Finally on Thursday, we saw the Index slip below the 1398 (click).
Currently the SP500 has closed the week at 1369, after a 2.5% odd Fall from the top..
Our study was just in time to catch the big move, where to next ?

S&P 500: Long Term View (or) Month Chart with closing prices in a line graph (or) EOM Chart:  
S&P 500 - End of  Month Chart (EOM) - 04 May, 2012. 
Support, after last week's fall, was on the 5 EMA.
Our Three Inside Down is active so long as the month is below 1398.
On the Stochastic, the %K has moved below the %D.
Bulls are still on top, at the Long Term Screen.

S&P 500: Medium Term View (or) Week Chart, each candle is 1 week's price action (or) EOW Chart:   
S&P 500 - End of  Week Chart (EOW) - 04 May, 2012.
We saw the Bullish 'Three Inside up' and a potential Deflection (10 EMA) on this Screen last weekend.
The Bearish Signals from the 'higher' Time Frame, Monthly Screen - dominated the above signals.
The 10 EMA has therefore crossed bearishly below the 13 SMA.
Support is on the White - Weekly Channel bottom.
The Medium Term View is Neutral.

S&P 500: Short Term View (or) Day Chart where each candle is 1 day's price action (or) EOD Chart: 
S&P 500 - End of  Day Chart (EOD) - 04 May, 2012.  
Price has dived below the MVWAP 34, and is below all short MAs that we watch.
Bearish crosses of above MAs in progress.
Support on Week Channel's bottom line,  with Histogram ticking into minus.
This Screen is in Bear hands.

Looking Forward into the Next Week:
Bulls get strength above the MVWAP 34 and  Bears momentum, below the White Channel line.
The Yellow 'Day' channel should hold the Action.
Intra-week Updates, shall be up.