Wednesday, October 2, 2013

SPX Daily Chart Rising Wedge Gaps Potential Island Reversal Standard Deviation Bands

The bulls provide a big jump higher yesterday gaining 13 handles. The pink standard deviation bands are playing out with the upper band violation 9 days ago. This says that price needs to visit the middle band, at a minimum, and typically price seeks the opposite band. Price has come back down to touch the middle band, which is also the 20-day MA at 1689.93, to satisfy a reversion to the mean, and a touch of the lower band, at 1651 and rising, remains on the table. On Monday, price prints an intraday low with a 1674 handle, barely, where the bounce occurred. The gap is 1671-1674 so price did not pierce or fill the gap. Since the indicators remain weak and bleak (red lines), price should come back down for another look at this 1671-1674 gap area. The SPX remains on an island right now at 1674+, so a potential island reversal pattern is in play where price would come down to 1674-1675, and immediately collapse down through the gap to print 1671 and lower, or, price may simply come down to fill the gap. There are other gaps below which create swiss cheese targets between 1580-1635. Note that there are no open gaps above so there is no reason for price to move higher.

The overall red rising wedge is in play with price receiving a spank down from the upper rail and deciding if it wants to move lower to test the bottom rail at 1665-ish. Note that the bottom trend line and rising lower standard deviation band would form a confluence of support and provide a landing zone at 1655-1665. The 20-day MA and 50-day MA at 1679.96 play key roles in ongoing price action. Bulls win above 1690. Bears win below 1680. A knock-down drag-out bull-bear fight continues at 1680-1690. S&P futures are -9 as this missive is typed about one hour before the U.S. opening bell which would place price in the battle zone between the MA's. Projection is for sideways to sideways lower prices moving forward. 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.


  1. its looks on the 2hr that there could quite easily be a massive move down from here.

    I wouldn't buy the bounce - like the reverse dip buyers yesterday.

    Yesterday sure did look like a meaningful bottom..err...yesterday


  2. Opens down UP for air, reverse dip buyers come in - down over night - trapped. Rinse and repeat. is but one potential.


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