Category Archives: Patterns

December Begins

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After the spike up at the start of the week I noted the clear break over the previous wedge resistance on SPX, and mentioned that the next decent candidate trendline was in the 2650 area. That was a slightly low estimate as that trendline was tested at the high yesterday at 2657.74, rather sooner than I was expected. At the first test SPX has rejected from it. SPX daily chart:

171201 SPX Daily


Breaking Up Isn’t Hard To Do In 2017

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Bears really haven’t made a significant impression on equity indices this year (Editor’s Note: no kidding…..….) and, statistically, there’s not much reason to think that might change in the last month of the year. One key trendline that I have been watching is the very decent looking rising wedge resistance from the 2016 low and that has broken up with some confidence today. That could still be a bearish overthrow, but that seems doubtful. More likely SPX is heading to test the next decent trendline option, currently in the 2650 area. SPX daily chart:

171128 SPX Daily


Thanksgiving Week

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For some reason Thanksgiving never made it as a national holiday in the UK, possibly because England was feeling a little sour after only winning a nonetheless hard won second place in The War Of Independence, but I certainly always enjoy it, and various branches of my family have had a long and storied history with the US over the last few centuries, so I feel that I am a sort of honorary american.

Some of those were descended from my great (x) grandfather Stephanus Van Cortlandt, who became the first native born mayor of New York in 1667, born in the city when it was still called New Amsterdam. On another branch of my family tree the lyrics of The Spar Spangled Banner were written by Francis Scott Key while a prisoner on the flagship of my great great great great grandfather Vice Admiral Sir Alexander Cochrane in 1814. The White House is called the White House because it was repainted white after being captured and burned by troops under Admiral Cochrane’s command in the war of 1812. Interesting days for all I’m sure ……. unlike the remainder of this week most likely. :-) (more…)

The Falling Megaphone on RUT

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A very key pattern that I’ve been watching here for direction is the likely falling megaphone on RUT.This has been a slow developer and has now been forming for an impressive seven weeks. Assuming that this is indeed a falling megaphone then the next target within the megaphone is megaphone resistance, now in the 1511 area, with the main remaining obstacle on the way at the monthly pivot, at 1500 even and tested at the highs today.

Assuming that this is that falling megaphone, then that falling megaphone is a high probability bull flag pattern, and when that breaks up the minimum target will be a retest of the all time high at 1514.4.If that retest can be kept to a marginal higher high then that is the bears’ next decent shot at a larger retracement, though seasonality makes it questionable that we would see that retracement in what remains of 2017. RUT 60min chart: (more…)

Janus Flags

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The Janus flag setup I was looking at on Wednesday delivered yesterday and I’ll talk a little more about these today as they are relatively common and worth remembering.

In this case on SPX what appears to be a high quality H&S has formed and broken down towards a target in the 2635 area. In truth though, as shown on the chart below, a perfect bull flag channel has also formed, which broke up yesterday with a strong minimum target at a retest of the all time high.

What were the tells here? The RSI divergence buy signals and lack of topping patterns on the hourly NQ and TF, and the channel/wedge shaped decline on SPX. A classic example of this kind of continuation flag is a break below the reversal pattern support and then rejection from there breaking declining resistance from the high, and that is what we have seen here. (more…)