Friday, June 13, 2014

SPX Daily Chart Fibonacci Retracements Rising Wedge Negative Divergence

The bulls sent price vertically for three weeks benefiting from the tight standard deviation band squeeze (pink arrows). The SPX runs from 1855 to 1955, 100 handles, +5.4%, in only 13 days. The higher price results in negative divergence with the histogram, stochastics and money flow, hence the spank down, but the RSI and MACD leave the door open, as well as the overall upside momo, to a move back to the highs.

The red rising wedge remains in place. Price thrusts above the wedge trend line to begin June but has pulled back for a test of the upper red trend line yesterday and today. Volume remains somewhat light but the selling yesterday is on higher volume than in recent days. The prior price area for comparable volume is 1920-1930 which also represents the apex of the rising wedge. The upper pink band was violated so a move back to the center band, the 20-day MA at 1914.80, and rising, is in play.

The 32% Fibonacci retracement is 1923 essentially where price bottomed yesterday with a 1925 handle. A strong 1920-1928 support zone is in place so the bears would need to push under this area to prove they have mojo. The chart is a candidate for a double top, or M top, pattern. The SPX 2-hour chart indicators are weak and bleak wanting another price low after price recovers today. Mixing all this together the expectation would be for price to bounce today, then give way lower again into the 1920-1928 support zone perhaps on Monday or Tuesday. Then a move higher again to at least 1939-1943 where this neighborhood or higher would create a potential double top and set up equities for a more substantive move lower going 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.

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