Tuesday, September 13, 2011

TYP 60m Wedging Into Support?

Here is a Think or Swim 60m chart of TYP Direvion Technology Bear 3x Shares (or in English - triple short tech bear ETF). First I will say these things are notoriously dangerous and will rip holes in your portfolio where money will pour not leak out if you are not careful with them. Always have a plan for each trade and always use stops.

Black diagonals are either an ugly channel or a large rising wedge.
There is a gap from 18 to 18.64 that needs to be noted.
Note the blue falling wedge.
Red horizontal support at 21.57.

At this time it looks like the blue wedge is in play, but the black formation was there first and may be the driver here. If so, look for first support at the black support diagonal near 22.22. If that goes you have to consider the blue wedge as the driver now and any move thru the red support line at 21.57 should result in a test of the lower blue support at or near the 20.20 area.

Looking at the COMPQ compared to the other indexes, it has been leading recently. This makes shorting with TYP a more dangerous game (going against the trend). That said, it also can make this sector the most rewarding to short if you are right and this index catches up or comes into parody with the others.

Daily TYP Chart - See the telling divergences that noted quite well the last two buy and sell opportunities - none exist here yet.

As always, be super careful and mindful of these leveraged instruments they are really not meant to be held or "swung" overnight and are primarily a day trading tool.

Your comments and thoughts are always welcome.

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