Wednesday, November 11, 2015

SPX S&P 500 Daily Chart W Pattern Overbot Rising Wedge Negative Divergence

The W pattern bottom and breakout was highlighted as it occurred in early October. It is worth another look since this is one of the most powerful stock chart patterns. You can look for it in all your trades. The W is bullish and when it is under both the 50-day MA and 200-day MA it is uber bullish. The height of the W pattern is 117 handles so 2110-ish is the upside target and price ran parabolic straight to the goal feeding off central banker money pumps that were described as they occurred. The central bankers are the market.

The overbot conditions, rising wedge and negative divergence (red lines) create the spank down off the top five days ago. Note, however, that the MACD line was still long and strong hinting that price would like to fill that tiny gap remaining at 2119 which would button-up the top side. The weekly chart has more upside juice so the expectation would be for price to recover towards the highs from one week ago.

The 20-day MA is 2066.70 and 200-day MA 2063.59 and 50-week MA 2062.26, thus, the 2062-2068 is a serious gauntlet of support. Price fell to 2069 yesterday and bounced. The SPX is on an island above 2060 so the gap below will need filled in the future or an island reversal may occur where price collapses back down through the gap, from 2060 to 2050, in a heartbeat. Thus, the 2060-2069 is a serious support level where big trouble occurs below. The SPX began the year at 2059.

The weak and bleak indicators and MACD negative cross signal further downside ahead after any bounce would occur in this daily time frame. The 2060-2069 area may hold as support since the weekly chart indicators are showing that long and strong juice is still available on the weekly basis through the month. 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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