I posted this chart few weeks ago as a follwup to my short to show few possible paths SPX is going to take after it begins the descent and SPX has followed the one where I explained about a possible break of the channel into the deviation below. please refer links below the description to look at my previous posts on SPX short idea.
The only difference is that , this happened bit slowly than I anticipated , which makes this drop out of the channel less likely to be a deviation now.
As you can see we are bouncing from the Suupport zone as I had highlighed in my previous post.
Which brings us to the question where to from here.
On The Daily TF we have first hints of a reversal or a decent size bounce from here , We have bounced from a key support and ended the day with right candle stick on the daily, but we need one more day of price action to confirm the reversal. If we get another green day without breachnig the low we are likely to head up.
But If we zoom in to 4h TF things become clearer.
Lets Look at the follwing chart:
On Friday we broke structure to the upside on 4h and created a strong low at 4336. That number is not random , Will cover this in the next chart.
If we get a pull back and break higher than fridays high we will get a full Change of trend on 4h TF. Once we do we should be able to break all the 4h strong highs until we meet the Daily Strong high at 4502 which is what I think will be hard to break and we will get a strong rejection from there. From there we can do one of the two things , either come back down create a double bottom and try again to break the daily high at 4500 and continue higher. If not we will continue the daily trend by breaking 4336 low and head lower.
Now lets look at why price bounced from 4336. Following chart has the answer. If you know VPA , then you know price moves in ranges , just like candle stick patterns are fractles , Ranges can act like fractles as well. In the chart you can see There are 3 ranges R1 , R2 and R3 that formed on this uptrend. R3 is the larger range that encompasses R1 and R2 and 4336 is the VAL of this bigger range and as Per VPA theory , price in a range keeps roughly bouncing between VAH and VAL of the ranges .If you look at the VAH of R3 it concides precisely with the Daily strong high at 4500 which gives us another conflunece for a rejection there into the Daily OB shown in previous chart.
Finaly if throw regular old fibs and Gann Fan into the mix we get additional confluence for a rejection at the 4475-4500 region as shown in the chart below. 4475 rehion is a gann resistance and 4475-4500 0.5 to 0.618 region of the retracement.
Speculation:
If we do get a move like the one I have explained , i.e move to 4500 area and reject , we will have few pattern emerge like inverse H & S and cup and handle . I have highlighted the targets if they mature. But always remember all these patterns are pure manipulation to trap retails , it totally possible that there is a fakeout into the pattern where pa comes to lower 4300s and then reverses from there can creating yet another pattern a Double bottom so be careful , only trade confirmations based on market structure change.
Happy Trading All !!!
The only difference is that , this happened bit slowly than I anticipated , which makes this drop out of the channel less likely to be a deviation now.
As you can see we are bouncing from the Suupport zone as I had highlighed in my previous post.
Which brings us to the question where to from here.
On The Daily TF we have first hints of a reversal or a decent size bounce from here , We have bounced from a key support and ended the day with right candle stick on the daily, but we need one more day of price action to confirm the reversal. If we get another green day without breachnig the low we are likely to head up.
But If we zoom in to 4h TF things become clearer.
Lets Look at the follwing chart:
On Friday we broke structure to the upside on 4h and created a strong low at 4336. That number is not random , Will cover this in the next chart.
If we get a pull back and break higher than fridays high we will get a full Change of trend on 4h TF. Once we do we should be able to break all the 4h strong highs until we meet the Daily Strong high at 4502 which is what I think will be hard to break and we will get a strong rejection from there. From there we can do one of the two things , either come back down create a double bottom and try again to break the daily high at 4500 and continue higher. If not we will continue the daily trend by breaking 4336 low and head lower.
Now lets look at why price bounced from 4336. Following chart has the answer. If you know VPA , then you know price moves in ranges , just like candle stick patterns are fractles , Ranges can act like fractles as well. In the chart you can see There are 3 ranges R1 , R2 and R3 that formed on this uptrend. R3 is the larger range that encompasses R1 and R2 and 4336 is the VAL of this bigger range and as Per VPA theory , price in a range keeps roughly bouncing between VAH and VAL of the ranges .If you look at the VAH of R3 it concides precisely with the Daily strong high at 4500 which gives us another conflunece for a rejection there into the Daily OB shown in previous chart.
Finaly if throw regular old fibs and Gann Fan into the mix we get additional confluence for a rejection at the 4475-4500 region as shown in the chart below. 4475 rehion is a gann resistance and 4475-4500 0.5 to 0.618 region of the retracement.
Speculation:
If we do get a move like the one I have explained , i.e move to 4500 area and reject , we will have few pattern emerge like inverse H & S and cup and handle . I have highlighted the targets if they mature. But always remember all these patterns are pure manipulation to trap retails , it totally possible that there is a fakeout into the pattern where pa comes to lower 4300s and then reverses from there can creating yet another pattern a Double bottom so be careful , only trade confirmations based on market structure change.
Happy Trading All !!!
