The Dow Jones Monthly Chart I previously published has a broadening top pattern, the S&P doesn't have the same outlook and I'm sure many were looking at the S&P Monthly as a triple top however what I'm seeing instead is a rising expanded wedge or Expanding pattern which is a very bearish pattern on the stretched out Weekly. In its formation since late 2009 till 2013, you can see how its making it's way to the upper resistance level trend line again. Maybe 1800-1850 we will start seeing signs of topping. 1900 would be maximum for this to still be valid. I have seen this pattern play out many times in various markets and when they do play out, the end result is a devastating fall. We'll see if there is a fundamental catalyst for this to get started.
Trade active
⋅
S&P still rising but straddling the upper trend line. Price still rising but overall pattern advises that a tough hard drop is coming in the future.
Comments
InternalTraderNYC
⋅
Hey BM, I have the target down at the level where we got the last strong massive bounce and developed a higher low that created the trend line. Overall, however i believe if this happens and we get that low, we take out the 2009 low of 666. In terms of these expanded patterns, What happens is that the trend lines start small but price starts bouncing between these until they expand so wide apart that it eventually it makes it impossible for price to just keep extending, unless it goes wildly parabolic. It works the opposite as well if price is going down.. If price is falling and trend lines that the market is respecting starts widening too much, it will make an attempt to test the opposite side and move up sharply. We'll see what happens though as we know that we're also fighting the Federal reserve on this.
CoinedByCrypto
⋅
I agree. Nice chart! What is your reasoning for hitting the area around 1106.34? Is it the almost "double bottom" of 2011 august low...?. What does your backtest tells you now that you have seen the pattern many times before. Why not the area of 1060/1070 where you have the summer of 2010 support? See chart