Thursday, May 23, 2013

SPX 60-Minute Chart 200 EMA Cross Upward-Sloping Channel

The upward-sloping channel clearly shows the strong market bullishness over the last three months. The price versus 200 EMA cross is important on the 60-minute chart as a forecasting tool. The SPX remains above the 200 EMA signaling bullish markets for the hours ahead (conflicting with the 8 and 34 MA cross on the 30-minute chart). Note the paltry attempts at negative crosses in February and April that the bulls quickly reversed. A reversion to the mean is desperately needed which would be a price move under the 200 EMA now at 1618 and rising. The red lines show the negative divergence spank down and the indicators remain weak and bleak indicating further weakness for a few handles ahead which equates to a few hours of time (one-hour candlesticks).

Note how price bounced directly off the 1649-1650 support, which is also the bottom rail of the channel, so this level has street cred moving forward. SPX S/R (thin brown lines) is 1687, 1680, 1675, 1667-1669, 1661, 1649-1650, 1633-1634 and 1626-1627. Projection is sideways to sideways lower until positive divergence appears. Watch to see if the bears can move price down through the 200 EMA at 1618.81, and rising, which is also strong support, if so, the downside will gather momentum. Considering that the 200 EMA is rising, a showdown may be developing for the key 1625-1626 level. The 20-day MA is 1627.07. If the 1625-1627 area fails, a failure of the 200 EMA is likely in quick order. As a first step, watch to see if 1649-1650 support holds, if not, then a test of 1633-1634 is next. This information is for educational and entertainment purposes only.  Do not invest based on anything you read or view here.  Consult your financial advisor before making any investment decision.

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