Friday, September 27, 2013

SPX 30-Minute Chart 8/34 MA Cross Falling Wedge Sideways Symmetrical Triangle Gap Potential Island Reversal

The 30-minute shows a close-up of the falling wedge in play. Price pauses at the top trend line not yet willing to break out to the upside. The 8 MA remains under the 34 MA signaling bearish markets for the hours ahead, however, the moving averages are moving in on each other for a decision today. Either the SPX falls, sending the 8 MA lower again to guarantee a further bear path ahead, or, the bulls will show up driving the 8 up through the 34 to signal bullish markets ahead. The 8/34 cross is a key market metric today. S&P futures are weak this morning, -7 at this writing, so drama at the 1691-1692 support may be on tap.

Price gapped-up from 1688 to 1691 creating an island and price continues to sit on this island. If the SPX drops to test 1691, and collapses to 1688 and lower in a heartbeat, an island reversal pattern will occur. Price may also simply leak lower and fill the 1688-1691 gap. The bounce at yesterday's opening bell was telegraphed by the positive divergence. The action all day yesterday, however, results in a sideways vibe now with the brown sideways symmetrical triangle in play. Note the sideways nature of the indicators as well. The money flow and RSI are one single hair above the 50% levels giving the bulls a nod. Price can move into the apex of the brown triangle today if it moves through a range of 1694-1698 but a decision has to be made within a few hours. The brown triangle says markets must decide up or down either later this afternoon before the closing bell, or on Monday morning. Obviously, the CR deadline gels with this scenario creating drama for the days ahead. The stakes are high since the vertical side of the triangle is 11 or 12 points, thus, either price is going to explode to 1710-1711 and higher (1698 break-out + 12) or collapse to 1682-1683 (1694 collapse - 12).

Markets would likely deteriorate if the strong 1691 gives way, this is also last week's low. The 200 EMA on the 60-minute chart is 1685, another key bull-bear line in the sand. The collapse lower out of the brown triangle would send price lower to test the 200 EMA. Markets are set to open lower so watch the interplay through the triangle and most importantly the 8/34 cross since this tells you who is winning. 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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