A bull run is sustained as long as price holds above 200DMA (Daily moving average), but its retested (blue arrows) as in earlier runs. However, we NEVER had a weekly close candle below the 200DMA and the bull run continuing again.
As shown by the hammers in the chart, a weekly candle close below the 200DMA line in 2014, 2018, 2019, 2020 marked the end of a bull run/rally and confirmed a bear market or more significant drop in price.
Now, last week's candle close was below 200DMA, I'm taking it as a signal to be bearish or very cautious.
Also to note is that after the weekly close below 200DMA, there is usually a dead cat bounce as a last chance for investors to exit, we may have that again.
2) We are also seeing a bearish cross of 50DMA (orange) below 100DMA (blue), which historically is a warning sign for bear market confirmation
Bearish confirmations:
1. Weekly close below 200DMA
2. 50DMA making a bearish cross below 100DMA
3. Weekly close below 20WMA (Weekly moving average)
4. 50DMA making a bearish cross below 200DMA (YET TO HAPPEN)
How investors/traders/HODLers can react/strategize for this idea
1) Assume that history repeats and predict there will be a significant drop or a bear market and
- Take profits
- Reduce positions
- EXIT the market
- Trade cautiously with strict stop loss
2) Instead of assumptions or predictions, follow the FACTS
Its a fact that bull runs continue only above 200DMA and end below 200DMA i.e if this is just a correction inbetween the 2021 bull run, the price will eventually go above 200DMA to new highs. So it HAS to break above 200DMA
Simple investor strategy is to sell if price is below 200DMA and buy above 200DMA, there maybe some chop like the dead cat bounces seen previously, but since this is a higher time frame moving average, it should not be too much trouble.
But this way, you can be sure you are on the right side of the long-term trend.
All the best!
As shown by the hammers in the chart, a weekly candle close below the 200DMA line in 2014, 2018, 2019, 2020 marked the end of a bull run/rally and confirmed a bear market or more significant drop in price.
Now, last week's candle close was below 200DMA, I'm taking it as a signal to be bearish or very cautious.
Also to note is that after the weekly close below 200DMA, there is usually a dead cat bounce as a last chance for investors to exit, we may have that again.
2) We are also seeing a bearish cross of 50DMA (orange) below 100DMA (blue), which historically is a warning sign for bear market confirmation
Bearish confirmations:
1. Weekly close below 200DMA
2. 50DMA making a bearish cross below 100DMA
3. Weekly close below 20WMA (Weekly moving average)
4. 50DMA making a bearish cross below 200DMA (YET TO HAPPEN)
How investors/traders/HODLers can react/strategize for this idea
1) Assume that history repeats and predict there will be a significant drop or a bear market and
- Take profits
- Reduce positions
- EXIT the market
- Trade cautiously with strict stop loss
2) Instead of assumptions or predictions, follow the FACTS
Its a fact that bull runs continue only above 200DMA and end below 200DMA i.e if this is just a correction inbetween the 2021 bull run, the price will eventually go above 200DMA to new highs. So it HAS to break above 200DMA
Simple investor strategy is to sell if price is below 200DMA and buy above 200DMA, there maybe some chop like the dead cat bounces seen previously, but since this is a higher time frame moving average, it should not be too much trouble.
But this way, you can be sure you are on the right side of the long-term trend.
All the best!