Continuing from previous thread where approximating the extremity of a phi related (multiplicative inverse - 0.618) fakeout reversal zone to be 0.75 provided a short entry @ $4632, just $5 shy from the local top which reversed at 0.737 - $4637.
From there SPX printed a Shooting Star to conclude that week. This provided another shorting opportunity to enter at the close of the star with stop loss above the top, however use of reversal ratio had already provided a better entry.
Completing the previous week SPX has printed another bearish candle with bearish upper wick and candle body. And over 3 weeks a bearish Evening Star candle pattern has printed.
The fairly long upper wick and small body of the star are very bearish and is a typical topping candle revealing plenty of selling pressure in the wick area. The third candle adds additional cause to the bearish case although it did not quite engulf the 1st bullish candle which found some support albeit probably temporary on the 50 week moving average and formed a lower wick.
Bollinger Bands show that SPX is slipping into a downtrend in the lower quadrant for the first time since 2020 top and this X wave Evening Star is probably also a fakeout reversal through the Bollinger Basis Line with last week's candle proving the rejection. In the probable next wave down most likely the Lower Band will be pierced again.
...
Looking at the daily chart there was a gap down to reject from 0.618 and the 100 day Moving Average which then saw some upward movement to fill the gap that now repaired adds further cause to the downside. The week closed with SPX sitting just below the 200 day Moving Average and also on the Basis Line so this is a point of inflection. There could be a bounce, who knows short term really, but with gap filled and all the aforementioned there is plenty of cause to the downside. Worth noting also that the 100 and 200 day Moving Averages will likely see a bearish cross soon.
All of this should see completion the right shoulder of a Head & Shoulders pattern with where the left shoulder topped in August.
...
So it appears SPX is entering a crash structure and now the obvious and probably unknowable question at this point is what type of crash it will be and how deep it will go. But we can look to the past and make an educated guess.
First target is the 1:1 Fibonacci projection to $3960 and if it gets there it will probably overshoot. This seems highly probable at this stage.
And if it goes lower without a significant bounce it may hit the 1:1.618 target at $3592 which would also see it hit or get very close to the 200 week Moving Average as it did in 2018 where it found the exact bottom.
More downward momentum will see the RSI move back down into the lower quadrant and if it were to replicate 2018 it would reverse on the Lower Band. And there is also plenty of downward cause here too with RSI diverging from all the way back to the probable left shoulder in August.
For the targets described I am not necessarily expecting a zig-zag pattern. As seen in previous structures; pattern formation can get exotic, that said a simple zig-zag is also possible.
At present this is a technical crash structure, but of course a black swan could add fuel to the fire.
Not advice.
From there SPX printed a Shooting Star to conclude that week. This provided another shorting opportunity to enter at the close of the star with stop loss above the top, however use of reversal ratio had already provided a better entry.
Completing the previous week SPX has printed another bearish candle with bearish upper wick and candle body. And over 3 weeks a bearish Evening Star candle pattern has printed.
The fairly long upper wick and small body of the star are very bearish and is a typical topping candle revealing plenty of selling pressure in the wick area. The third candle adds additional cause to the bearish case although it did not quite engulf the 1st bullish candle which found some support albeit probably temporary on the 50 week moving average and formed a lower wick.
Bollinger Bands show that SPX is slipping into a downtrend in the lower quadrant for the first time since 2020 top and this X wave Evening Star is probably also a fakeout reversal through the Bollinger Basis Line with last week's candle proving the rejection. In the probable next wave down most likely the Lower Band will be pierced again.
...
Looking at the daily chart there was a gap down to reject from 0.618 and the 100 day Moving Average which then saw some upward movement to fill the gap that now repaired adds further cause to the downside. The week closed with SPX sitting just below the 200 day Moving Average and also on the Basis Line so this is a point of inflection. There could be a bounce, who knows short term really, but with gap filled and all the aforementioned there is plenty of cause to the downside. Worth noting also that the 100 and 200 day Moving Averages will likely see a bearish cross soon.
All of this should see completion the right shoulder of a Head & Shoulders pattern with where the left shoulder topped in August.
...
So it appears SPX is entering a crash structure and now the obvious and probably unknowable question at this point is what type of crash it will be and how deep it will go. But we can look to the past and make an educated guess.
First target is the 1:1 Fibonacci projection to $3960 and if it gets there it will probably overshoot. This seems highly probable at this stage.
And if it goes lower without a significant bounce it may hit the 1:1.618 target at $3592 which would also see it hit or get very close to the 200 week Moving Average as it did in 2018 where it found the exact bottom.
More downward momentum will see the RSI move back down into the lower quadrant and if it were to replicate 2018 it would reverse on the Lower Band. And there is also plenty of downward cause here too with RSI diverging from all the way back to the probable left shoulder in August.
For the targets described I am not necessarily expecting a zig-zag pattern. As seen in previous structures; pattern formation can get exotic, that said a simple zig-zag is also possible.
At present this is a technical crash structure, but of course a black swan could add fuel to the fire.
Not advice.
Comment:
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Comment:
Fast upthrust upper wicked fakeout today through the 200 day MA followed by huge downward engulfing candle resuming the dominant trend to the downside and proving the bear market is on.
This was also an upper wicked fakeout through the Bollinger Basis line, maintaining the trend in the lower area.
This was also an upper wicked fakeout through the Bollinger Basis line, maintaining the trend in the lower area.
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