| GUY COHEN’S TRADE RADAR
The Art of Timing the Inevitable Retracement
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So we’re still getting those warning signs including price overextension, gapping, doji candles, and monorail bars but so far no confirmation as the market continues to display extraordinary resilience.
As expected during a festive season week, price action was unspectacular and inevitably sideways.
What does that mean? Well, there's not much selling action yet, and price drift isn’t being accompanied by volume. So there could well be another hoorah in this bullish cycle, and it could even extend to the upcoming January earnings season.
As I alluded to earlier, there are many consolidations occurring right now, but the vast majority of them are from overbought levels. This tells us we’re in a serious uptrend, but that we’re due a meaningful retracement very soon.
The question is … when?
Well, that will be sometime after a proper confirmation that a top is in. And the timing of that could be any time from now to the middle of earnings season.
In the meantime just don’t be tempted by already overbought issues. Stick to our game plan — you’ve just seen how amazing it is, and I can promise you there will be many more opportunities in 2024.
When we do get the inevitable retracement, I expect it to be down to a Key Level and followed by an increasing number of Bullish Shrinking Retracement patterns, which will set the scene for further upside in 2024.
I expect this scenario to materialize during Q1 of 2024.
So, as with the last few weeks, resist the urge to chase overextended issues.
Follow the money,
— Guy Cohen
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