This is a supplement/update to my bigger picture SPY idea, linked.
Ignore the title lol, its not obvious nor typical to form an expanding triangle d within a larger expanding triangle (d)... is it? Regardless, it is indeed a bounce setup to get to larger (e) in the 4200s (420s SPY).
I have a lot of trendlines but those are actually important to demonstrate the concept I believe sheds light on the dynamics here: there is a lot of resistance and support formed over the course of corrective wave starting in Jan 2022 (so a lot of critical levels, I need to get volume profile, I know)... so what I'm seeing here is there is a need to generate the escape velocity to make the next leg up; thus, a pattern such as an expanding triangle seems pragmatic here because it creates the volatility necessary to accomplish this. It also sets up higher risk for a failed local breakout if there is a failure to break resistances or too much downward velocity when testing support. If break lower could see more down to low 3600s, high 3500s... but the stochRSI and RSI at 1-4 hours are indicating explosive bounce likely.
I don't know if this setup is manufactured by whales or if its just a result of the uncertainty that comes with the FOMC, but looks like we are going higher to at least test 3900-4000, then backup to test old resistance as support before attempting to make a higher high to complete larger (e).
Below is bigger picture for SPY, this idea is just zooming in on leg (d):
.
Ignore the title lol, its not obvious nor typical to form an expanding triangle d within a larger expanding triangle (d)... is it? Regardless, it is indeed a bounce setup to get to larger (e) in the 4200s (420s SPY).
I have a lot of trendlines but those are actually important to demonstrate the concept I believe sheds light on the dynamics here: there is a lot of resistance and support formed over the course of corrective wave starting in Jan 2022 (so a lot of critical levels, I need to get volume profile, I know)... so what I'm seeing here is there is a need to generate the escape velocity to make the next leg up; thus, a pattern such as an expanding triangle seems pragmatic here because it creates the volatility necessary to accomplish this. It also sets up higher risk for a failed local breakout if there is a failure to break resistances or too much downward velocity when testing support. If break lower could see more down to low 3600s, high 3500s... but the stochRSI and RSI at 1-4 hours are indicating explosive bounce likely.
I don't know if this setup is manufactured by whales or if its just a result of the uncertainty that comes with the FOMC, but looks like we are going higher to at least test 3900-4000, then backup to test old resistance as support before attempting to make a higher high to complete larger (e).
Below is bigger picture for SPY, this idea is just zooming in on leg (d):
.
I have noticed on many occasions S&P and naturally SPY algos will test out the bigger patterns mid-completion at the lower patterns multiple times to essentially test (it seems) how to best complete the bigger patterns.. or, to test what would make or break a bigger pattern based on the outcome of the fractals. And that's nasty.