Friday, August 15, 2014

SPX 2-Hour Chart Bull Flag Pattern Negative Divergence Developing

The 2-hour chart is slowly setting up with negative divergence but yesterday's thrust may delay the development for a couple days. The red lines show that the histogram, stochastics and money flow are cooked and fully agreeable to price dropping. Stochastics are overbot. However, the RSI is not yet overbot and both the RSI and MACD line are long and strong wanting higher highs in price. Thus, it may take from 1 to 4 more candlesticks for price to top out which is 2 to 8 hours which may encompass today and Monday trading.

The rising wedge is in play with an apex at 1964-ish. Taking another look at the bull flag pattern highlighted yesterday, using closing prices, leg one is 1910 to 1943, 33 handles, so the second leg starting at 1932 targets 1964. Using the intra-2-hour prices, leg one is 1905 to 1945, 40 handles, so the second leg starting at 1928 targets 1968. As highlighted in the previous daily chart, the 1957-1961 zone is a serious resistance gauntlet. The 1963 and 1968 levels are also strong resistance levels.

Thus, marrying all this mumbo jumbo together, the daily chart may need a couple days to top out. The 2-hour chart above jives with the daily and shows higher prices are desired after any price softness would occur. The 1957-1961 R is key; then 1963; then 1968. Thus, if 1961 is taken out, a move to 1968 is likely. This would achieve both the rising wedge and bull flag pattern target at 1960-1968. So, making a projection, the stock market will likely stagger sideways with upside lift perhaps topping out at 1961, or 1968, either very late today or early next week. Watch for the neggie d to form for the RSI and MACD line in the chart above to know that price has topped out. 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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