Thursday, June 13, 2013

SPX Daily Chart 50 MA Test H&S Pattern Trend Line Test

Lots of drama with the SPX daily chart today. First and most importantly, is the test of the 50-day MA at 1611.68. Bounce or die. A major market story line is currently being written. Under 1600 the important intraday low from several days ago at 1597-1598 is key. This is very strong support so if the 50-day fails, the next fight will likely occur at this strong 1597-1598 support where another bounce or die decision will be made. The brown bars show the ongoing H&S patterns. A head at 1669 and neck line at 1598 will target 1527 if the 1598 fails. Using the intraday high, a head at 1687 and neck line at 1598 will target 1509 if the 1598 fails.

To add to the theatrics, price is now testing the lower trend line of the multi-month upward-sloping channel (thin black line), so a rupture at this critical 1609-1612 area is very important. Note that price has not printed a lower low as compared to several days ago so positive divergence cannot yet exist. The histogram and stochastics are sloping up but this is meaningless until price prints a lower low in the area of the red circle. At that time, should it occur, review the indicators to see if any positive divergence is in place to create a bounce. Overall, the chart hints at further lows and price moving into the 1590's for a proper bull-bear test to see which side wants to win. The right margin shows two outcomes, either a recovery from the 1597-1598 support, or, a break down through 1597-1598 which sets the above H&S targets firmly on the table. 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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