Monday, March 13, 2017

SPX S&P 500 2-Hour Chart; Sideways Symmetrical Triangle; Tight Standard Deviation Bands

The 2-hour chart is interesting. Look at the pink standard deviation lines coming in tight ready to squeeze out a huge move (pink arrows). Tight bands do not forecast direction only that a large move is likely on tap at anytime. Note the prior tight bands in late February popped that move higher about 40 points in a flash.

The blue sideways symmetrical triangle is in play with price squeezing in tight having to make a decision up or down. The vertical side of the triangle is about 45 handles so that jives with the magnitude of the move from the last tight band squeeze. Thus, there should be a 40 to 45 handle move coming in the SPX.

Something very interesting is that the bands have already squeezed in as tight as late February ready to begin a wild price move one way or the other, however, the Fed rate decision, which will be an epic market event, is on Wednesday afternoon. That would be about 4 or 5 of the 2-hour candlesticks. Can price travel through that tight standard deviation tunnel for another 4 or 5 candlesticks? It does not seem so. It seems that price may decide on direction before the Fed announcement.

Also, price may pull a fast one. The initial move from the triangle may be a fake-out. These patterns are sneaky where they hint at moving one way but then reverse quickly and reenter the triangle and push out the other side for the true directional move so you have to stay alert.

Let's just say price is at 2370-ish so the downside target is 2325-2330 and the upside target is 2410-2415; probably one of these results will print by Friday. The chart is not providing any hints on direction. Simply watch to see if price move above the top triangle trend line and then above the outer band at 2376, or, if price collapses out the bottom trend line of the triangle and below the lower band number at 2362. Since the chart hints that the move may happen before the Wednesday afternoon activities, perhaps some wild news occurs tomorrow impacting markets?

Bulls have favorable seasonality factors. Stocks were buoyant moving through the full moon on the weekend as expected. During OpEx week a Tuesday low typically leads to a Wednesday high. Stocks are typically bullish heading into a Fed meeting decision. Perhaps oil or geopolitics will create drama on Tuesday? The tension mounts. The circus is coming to town on Wednesday. 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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