AMD to $10 - bearish divergenceOn the above 2-month chart price action has appreciated 8500% since September 2015. A number of reasons now exist to be bearish. Side note: Timing the market tops or bottoms is not my forte. Instead, these large time frame ideas are an attempt to measure the probability of continued trend versus risk.
Why bearish?
1) The ‘incredible sell’ signal prints. On a 2-month chart! This is a bubble. A large bubble. In fact, if you got a moment, it's a twelve-storey bubble with a magnificent entrance hall, carpeting throughout, 24-hour portage, and an enormous sign on the roof, saying 'This Is a Large bubble’. A large bubble requires a large plan.
2) Regular bearish divergence. A number of oscillators are printing bearish divergence with the recent higher high in price action.
3) The upper trend line resistance. Pay attention to this one, look left. Only twice before has price action reacted so strongly to this resistance, once in 84 and again in 2000. Will this time be different? It’s a heck of risk to take!
4) Stochastic RSI tests 40 and rejects. (Purple circles). Look left, the last time this happened a 80% correction followed.
Why $10? Well that’s going back to point 3. On the previous two occasions price action confirmed resistance. A correction to the Fibonacci 0.618 golden ratio was then observed. The ratio currently prints around $10.
Is it possible price action moves higher? For sure. Who knows where the top is.
Is it probable? No. The probability of continued upside is now <10% versus a high risk of downside.
Good luck!
Ww
