Bumpy start .... trend line breaks .... never in a straight line

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Derek  1 Nov 2018

Good Morning,

International:
Although the trend lines of all the indices are broken, it looks like a bumpy start as they did not close at the high of the day. At least it is still positive and above the EMA8 line.

I show this for the S&P500.



The DAX also broke its negative trend line and EMA8 line. Notice that the turn came with a doji and divergence.



I concentrate today on trend line breaks. Illumina made the classical abc correction and turned with divergence to break the trend line.



My old favorite, Bank of America, had the 3 phase trend line correction in the shape of an ellipse. Then 3 doji's on support to finally break the trend and EMA8 lines.



JSE Technical:
Instead of showing any shares, lets just show indices that can also be bought as a share.

The STX40 also broke its trend and EMA8 lines. Notice the consolidation on support with divergence in place before the break.



Similarly for the resources. STXRES



I must show the chart of Tencent. I would not say that the negative trend is something of the past, as the negative trend lines are still in place. What I do want to show is that every previous turn came with divergence and then lasted only about a week and a half. I only marked the last divergence. We are still far below the 50 (blue) and 200 (red) day moving averages and until they are broken we must only see the current move as short term. Watch breaks of the EMA8 (orange) line for short term moves.



What makes share moves so difficult, is that nothing happens in a straight line. The smallest negative bar puts fear on the table. If you are a medium term investor, you need to draw those long term trend lines and stay with it until broken.

Enjoy your day.
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