Click on Chart to Enlarge
IWM, the Russell 2000 ETF, formed a very wide range bearish engulfing pattern today. This is a classic top reversal candlestick, so we may be seeing an intermediate (on longer) term high here, but should likely expect some further downside in stocks. Looking at the MACD study below the chart we can see a sharp bearish divergence to go with the reversal candlestick pattern. So this looks legit as a reversal.
Given the overly optimistic sentiment I've discussed recently, this may be our cue that the market is entering a correction.
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