Sunday, June 9, 2013

SPX 2-Hour Chart Downward-Sloping Channel Fibonacci Retracements H&S Pattern

The blue lines show the Fibonacci retracements for the upside bounce based on the drop from the 1687 top to the 1597 bottom. The 38% Fib at 1632 gave way during the wild upside orgy on Friday, however, the 50% Fib at 1643 halted the move higher before the weekend. For the new week, watch to see if price can move up through the 50% Fib to venture to the 62% Fib at 1653. A 100% Fibonacci retracement would bring price all the way back up to 1687. The green dots show higher highs and higher lows which are standard for a rally.  The brown dots show lower lows and lower highs indicative of a sell off and price remains in this downwards pattern. This current level is where the prior lower high occurred but even if price continues higher, there are other lower highs that would need to be taken out before the bulls can claim victory.

The downward-sloping channel is in play and price is at the top rail to start the week, an inflection point where price will either bounce, or die. The 50% Fib and the upper rail form a confluence so the price move higher, or lower, is important to begin the week and will likely forecast the path ahead for a few hours.  The short green lines show indicators that are long and strong so higher highs in price are desired based on the two-hour candlesticks. Thus, 2 or 3 candlesticks would be needed before potential negative divergence can roll price over to the downside again; this corresponds to 4 to 6 hours of trading time which would place the markets into Monday afternoon trading.

The pink lines show a Head and Shoulders pattern with head at 1687 and neckline at the strong 1598-ish support which would target 1509 if the 1598 fails. There are several H&S patterns in play now using the 1687 top as the head. A neckline at the strong 1626-1627 level is of interest which would target 1565 if the 1626 fails again. Projection is sideways price action through 1640-1653 to begin the week but a roll over to the downside would follow behind. The anticipation is that the critical 1646-1653 resistance gauntlet should hold as a ceiling. 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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