SPY- History Repeats

I have a bit of a fractural idea to share. I am not even sure if you would call it that or not. I am just anticipating similar price action that we had seen once we first broke our bullish trend back in October of last year. I have outlined that area with a box. Now I believe that we could see something similar to this same type of consolidation here, but with a much weaker ending, I would expect (see snapshot below). I do expect to see selling to start fairly soon and for us to be testing our recent lows again. We could breakthrough at that point or get an extra bounce.

In my last analysis, I had been looking for a bounce in the 270-275 area and we have surely gotten that bounce, it bottomed at 273 but it was IMO an overshoot of 275. Now we have gotten the bounce and it has produced a very similar distribution pattern that we had seen last year after breaking the PRIOR years high... Which is where we are currently as well.

I had a defined trade plan to start shorting this market if we passed the prior highs level, that happened on October 8th and I have been biased short since then, for the direction of highest probability. The same level that Got me into this market is being tested right now as resistance. Let's see if my old friend horizontal 288 holds true once again.

RSI is at the same level that we got to before the SPY made its big plunge up until Christmas. This coincides with my fractal idea well as I do not expect us to get much of a bounce after double bottom (SPX 2730)

This area is very important because it would be the bulls chance to keep the momentum going. If they cannot and we test the lows that we came from then I wouldn't expect them to hold.

Many times in trading you can see short squeezes happen just before big drops. This is to make sure only the right people are able to take full advantage. A recent example that comes to mind would be GBP/JPY and its spike up (a few weeks ago) before it started to tank.

Price action did go up last week but in a very unsustainable manner. Those types of high volatility whip saws do not scream bull market. .. ..in fact, the opposite.

Looking at the Fib Extensions and horizontals to anticipate our next bounce at 264-263

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Declining Volume on this dead bounce. .. This could turn over soon

To me, this price action from last week is just some friendly short squeezing, before the big plunge. : )

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Very Weak Open... Down From here. Similar to a bull trap. No follow through ..

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SPX Chart (same as ES!)

Strong Sell volume hitting the open today. I doubt we see any higher prices

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QQQ's and other sectors are confirming the same behavior.

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Fading an opening gap up is bad news bulls... I am sure that this gap will be filled within the next hour or 2. After that, I expect weak behavior followed by initial signs of breakdown in structure, Once we cross our support trendlines I expect to see very impulsive selling to kick in.

Also, we have hit our horizontal resistance as outlined in the original post. This resistance comes in at the bottom of the real ATH in October of last year.

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We have three drive bearish divergence on the 15 min and 30 min

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Will we fill two days worth of gaps today?

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if so ... wow, that's pretty incredible.

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382 pullback into resistance declining volume, down from here most likely. Testing lows and breaking should impulse upon break at 288

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SPY has already done a lot today, It could need a rest to recharge its batteries and consolidate. It may do so in an ascending wedge once again but the price would float up for a bearish breakout consolidation. Although, if we do start breaking any horizontal supports expect to see the selling mayhem to continue.

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This would be an example of an ascending consolidation that could take place if this chart needed time to recharge. Ascending consolidations impulse downward and are bearish.

This is just an example, Its hard to tell if we get that or just continue selling off.... As 'Ol Turkey would say.... '"It's a bear market you know" So I favor the selling off.

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YUP selling

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Looking for a breakout in either direction for closing day

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Close is not looking strong for the bulls so far.

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2 minutes till close will probably be selling off

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So we went with the path right in the middle of my two scenarios. Keep your eye on these horizontal support areas, as they break expect the selling to continue. RIght when the charts bounce and start to look like they are strong again, expect them to be sold into, including Bull traps and Gap and goes.

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Now nearing a second bear flag break. Look to next support.

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In the futures, we are watching for a potential Bull breakout up, but IF that were to occur I would assume the move would be limited. If we break below this consolidation then I would expect us to find our way falling for a nice gap down tomorrow.

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Futures did get the bull break on the pennant formation. It looks to be trying to find a top already, I expect a slight push up from here before resistance is found and held, and we reject tonight. There is still too the possibility that we make it all the way up near the top to backtest our old ascending channel support.

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Possible scenarios to watch for. Keep your eyes on the ES! futures tonight, a big drop could happen.