Fractal Suggests Stocks Could Be Bottoming
Looking at the weekly S&P500 chart, you can see that the fractal is continuing to play out nicely. Today, to S&P tested the 50 week MA (far right yellow circle.) You can see that each time we got a test of the 50 week MA, the market recovered and continued to climb for a while, until it eventually falls below the 50 week, and then finds support on the 200 week (purple circles.)
For anyone not familiar with this fractal that I discovered, it plays out like this...
1. Support on the 200 week. (purple circles)
2. Rally above the 50 week.
3. Two major holds of support on the 50 week. (green circles)
4. Extended rally.
5. Test of the 50 week. This is a warning sign! (yellow circles)
6. Breakdown below the 50 week.
7. Support on the 200 week. (purple circles)
What I've noticed is that the durations of each iteration of this fractal are becoming shorter and shorter. So, that suggests a weakening of the uptrend.
So, if we see that price ends up breaking down below the 50 week MA (in orange) and cannot get back above it, that would be a deviation from the fractal, which would basically mean that the fractal has completed itself. If that happens, I expect price would fall to the 200 week again, and then we would have to see how price behaves from there. Currently, there is no evidence of that. So, there is a chance that the fractal will continue to play out, if price can hold support on the 50 week MA.
I'm The Master of The Charts, The Professor, The Legend, The King, and I go by the name of Magic! Au revoir.
***This information is not a recommendation to buy or sell. It is to be used for educational purposes only.***
-JD-
For anyone not familiar with this fractal that I discovered, it plays out like this...
1. Support on the 200 week. (purple circles)
2. Rally above the 50 week.
3. Two major holds of support on the 50 week. (green circles)
4. Extended rally.
5. Test of the 50 week. This is a warning sign! (yellow circles)
6. Breakdown below the 50 week.
7. Support on the 200 week. (purple circles)
What I've noticed is that the durations of each iteration of this fractal are becoming shorter and shorter. So, that suggests a weakening of the uptrend.
So, if we see that price ends up breaking down below the 50 week MA (in orange) and cannot get back above it, that would be a deviation from the fractal, which would basically mean that the fractal has completed itself. If that happens, I expect price would fall to the 200 week again, and then we would have to see how price behaves from there. Currently, there is no evidence of that. So, there is a chance that the fractal will continue to play out, if price can hold support on the 50 week MA.
I'm The Master of The Charts, The Professor, The Legend, The King, and I go by the name of Magic! Au revoir.
***This information is not a recommendation to buy or sell. It is to be used for educational purposes only.***
-JD-
Comment:
After the market close today, we can see that the weekly candle is well below the 50 week moving average. This is definitely concerning, especially since it's currently a massive bearish engulfing candle. However, the weekly candle hasn't closed yet. We still have Friday. So, if the market can manage to recover tomorrow, and close above the 50 week, we will have a supportive hold there, and the fractal will remain intact.
