Friday, September 27, 2013

SPX 1-Hour Chart 200 EMA Cross Bands Tightening Gap Potential Island Reversal

The bulls are not concerned as long as the SPX stays above the 200 EMA on the 60-minute at 1685. Bad things will happen to equities when price falls under the 200 EMA. The price action is in a falling wedge pattern with positive divergence so the bulls have a slight edge, however, the RSI never reached oversold levels and the RSI, stochastics and money flow all remain in negative territory under 50%. Price may want to continue along honoring the boundaries of the falling wedge. Note that this would create a showdown for Monday with price at the critical 1688-1691 gap, ready to make a decision, as the CR deadline occurs, resulting in either a violent rocket launch higher, or collapse lower. Therefore, today's action, Friday, may be soft and sideways as the politico's set the stage for Monday theatrics.

The standard deviation bands are tightening and just squeezed out the big up white candlestick 7 hours ago and should create a larger jump with the timing matching the above description, today or Monday. Price gapped-up mid-month so a potential island reversal is on tap where price would collapse from 1691 back down through the gap to print 1688 and lower quickly. That would set up a test of the critical 200 EMA at 1685 where a major market decision is made. Note the prior jumps out of the tight bands. Price typically leaps to the outer band in a heartbeat so the big move likely in the hours ahead will either have the SPX at 1710+ or 1685- with one side happy and the other sad. The indicators are not tipping their hand moving more in a sideways vibe now. Watch to see if the SPX can print higher, at 1700+, which would constitute a break-out of the trend line and higher numbers coming, or, a breakdown at 1691-1692, which is the top of the gap, very strong horizontal support, and last week's low. Bulls are okay as long as the SPX stays above the 200 EMA at 1685. Bears take over firm market control moving forward at sub 1685This 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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