After a steep decline in the FX:SPX500 for the first 4 weeks of the new year, this market has been in a consolidation zone for the past 8 days. After further analysis, we can see an being formed, which is type of a consolidation zone pattern.
In this pattern we have a strong and a number of higher lows being formed as the buyers try to push the price higher and try to break that key . As buyers keep pushing price higher, against that strong , we are very much likely to get a strong breakout to the upside.
There are situations where the seems to be too strong and the buyers fail to break that level. The key point to keep in mind is that, all we need to watch for is the breakout in EITHER DIRECTION (up or down). One way or another, we can place buy or sell limit orders above ( ) or below (slope of the triangle).
The target for this pattern is equivalent to the height of the triangle (depicted by the blue ), which is at 2007.2. Stops would go either below the slope of the triangle for long entry and above the for short entry.
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