Candles Speak – Possible Trend Change – 29.12.2020

During the previous weeks, the daily candles of major indices typically formed the combos that pointed towards different directions (some – up, some – down). Today all – SmallCap, DJI, SPX, and NDX – closed in harmony. In bearish harmony.

Let’s have a look at each of them.
1. SmallCap
– cash: today’s red candle strongly confirmed the Bearish Engulfing of yesterday. Note that it was so strong that the daily PSAR flipped to the dark side.
– futures: today’s red candle confirmed both the Spinning Top and Bearish Harami/Inverted Hammer.
The odds are strongly on the bears side.
2. SPX and DJI
– cash: both indices made the Dark Cloud Cover combo. Note that for SPX it is stronger as it fully covers the upper wick.
– futures: both produced an incomplete Dark Cloud that is also very close to the Spinning Top candles.
A confirmation is required for both cash and futures and tomorrow could be that day. The odds are on the bears side.
3. NDX
– cash: completed a Meeting Lines combo.
– futures: formed a Spinning Top candle/doji.
Both combinations require a confirmation, ideally tomorrow. The bears are in the driver’s seat right now.

Summary:
Holistically, all major indices are under solid bearish pressure that could be overcome with a +1-1.5% day tomorrow. If the bears want to keep the odds on their side, their targets are very moderate compared to those of the bulls.
Let’s watch the battle tomorrow.

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