SPY Order Flow Analysis - OFA Script Calls For 2022 Target

As the previous post suggested, there is unfinished business to the downside in this unfolding bearish structure in the SP500. Bears are clearly in control of the downside in a move that features increasing velocity and magnitude of the decline vs a tepid and by now confirmed failed buying cycle, all well signaled via the OFA script.

As a reminder, a 100% projection target from the last bracketed area (see rectangle) suggests an ultimate target about 365.00, which aligns with the previous trend lows.

Remember the two key main features of this indicator:

Magnitude: A major clue that will help determine the health of a trend is the type of progress by the dominant side in control of the trend. We need to ask the following question: Are the new legs in the active buy-sell side campaign as identified by the script increasing or decreasing in magnitude?

Velocity: When it comes to the distance the price moves, the magnitude is only ½ the equation. The other ½ has to do with the velocity of the move or the speed. Was the new leg created after a fast and impulsive move? Or did price make a new low or high with the movement being sluggish, compressive and taking too long to form? A good rule of thumb is to count the number of candles it took to achieve a new leg.