Hello traders.
On the chart we have two equities, one with the plain candle sticks is Coca Cola (KO), and on the thin candle stick we have the SPY representing the S&P 500.
Analyzing this chart requires no special technical analysis knowledge, just a basic ability to compare geometrical shapes...At a first glance, there's a certain correlation between the SPY and KO. When SPY goes up, KO goes up to. When SPY goes down, KO follows up. There is a subtle difference though. Comparing the charts more closely, we can notice that the magnitude of the moves is different - when the SPY goes up, KO follows but with less persuasive momentum. On the other hand, When SPY goes down, KO follows the path with the same magnitude, if not stronger.
This type behavior is known as Correlation. On our case we have a negative correlation which means that for every positive move a base asset does, the compared asset follows weakly or even on the negative direction.
The outcome of this scenario tells us that KO is currently a weak stock, and probably will experience further sell pressure the following next weeks.
Plotting the DIG PivotBreak and the DIG SmartPoints (Available on TradingView, subscribing to ProTradingIndicator's studies) give us further insight into potential breaking points where a Short position could be taken. The purple line on $39.60 shows us the first support level where breaking it downward could lead to further downside action. Also, the price trading for a few days under the yellow midband further emphasizes the selling pressure under KO.
All in all, the picture is clear now, KO looks Bearish. A move under $39.60 will incur further selling, as a move above $41 will make us reassess the technical situation once again.
On the chart we have two equities, one with the plain candle sticks is Coca Cola (KO), and on the thin candle stick we have the SPY representing the S&P 500.
Analyzing this chart requires no special technical analysis knowledge, just a basic ability to compare geometrical shapes...At a first glance, there's a certain correlation between the SPY and KO. When SPY goes up, KO goes up to. When SPY goes down, KO follows up. There is a subtle difference though. Comparing the charts more closely, we can notice that the magnitude of the moves is different - when the SPY goes up, KO follows but with less persuasive momentum. On the other hand, When SPY goes down, KO follows the path with the same magnitude, if not stronger.
This type behavior is known as Correlation. On our case we have a negative correlation which means that for every positive move a base asset does, the compared asset follows weakly or even on the negative direction.
The outcome of this scenario tells us that KO is currently a weak stock, and probably will experience further sell pressure the following next weeks.
Plotting the DIG PivotBreak and the DIG SmartPoints (Available on TradingView, subscribing to ProTradingIndicator's studies) give us further insight into potential breaking points where a Short position could be taken. The purple line on $39.60 shows us the first support level where breaking it downward could lead to further downside action. Also, the price trading for a few days under the yellow midband further emphasizes the selling pressure under KO.
All in all, the picture is clear now, KO looks Bearish. A move under $39.60 will incur further selling, as a move above $41 will make us reassess the technical situation once again.