Is It a Head and Shoulders? We'll See...
My name is Michael and I'm a Trader from Canada. Thanks for having me guys.
SPY Analysis 10/05/20:
Since early April, we've witnessed a bullish trend in the form of a strong ascending channel, and a key support line emerge (in green) which acted as daily support 8 times, until it was broken on September 18th. We've been holding below this support line for 12 days in a row, stuck around the June peak support level, and the 21 day EMA, and 50 day MA. For those of you who think Polarity Principle could apply here, this green line became resistance on September 18th, as confirmed by subsequent price action. A retest of the line as resistance is common, before a continuation of the new trend, which in this case is downward.
I'm observing a predominant head and shoulders pattern emerging, which, if confirmed, could mean massive downside risk in the near term to the neckline at 300. The head is simply gigantic, and remember, once the neckline is broken, after the right shoulder collapses, the target could be at the 250 level before the head and shoulders trade is complete. On the MA front, the 50 day has held up very well as an indicator of the recent bull trend. Since late April, we've held above the 50 day MA, until it too was broken on September 18th. The 50 day has since been retested as resistance (Polarity Principle), but markets are up strong today, and we've breached the 50 day to the upside. Absent a late sell-off into the close today, it looks like we may close above the 50 day MA. We would need to hold above this key level, and also breach the green line before we observe a change in the trend back to bullish.
I'll also be analyzing the VIX over the next couple of weeks as it's a popular hedge against downside risk in the near term. Thanks guys. Michael.
SPY Analysis 10/05/20:
Since early April, we've witnessed a bullish trend in the form of a strong ascending channel, and a key support line emerge (in green) which acted as daily support 8 times, until it was broken on September 18th. We've been holding below this support line for 12 days in a row, stuck around the June peak support level, and the 21 day EMA, and 50 day MA. For those of you who think Polarity Principle could apply here, this green line became resistance on September 18th, as confirmed by subsequent price action. A retest of the line as resistance is common, before a continuation of the new trend, which in this case is downward.
I'm observing a predominant head and shoulders pattern emerging, which, if confirmed, could mean massive downside risk in the near term to the neckline at 300. The head is simply gigantic, and remember, once the neckline is broken, after the right shoulder collapses, the target could be at the 250 level before the head and shoulders trade is complete. On the MA front, the 50 day has held up very well as an indicator of the recent bull trend. Since late April, we've held above the 50 day MA, until it too was broken on September 18th. The 50 day has since been retested as resistance (Polarity Principle), but markets are up strong today, and we've breached the 50 day to the upside. Absent a late sell-off into the close today, it looks like we may close above the 50 day MA. We would need to hold above this key level, and also breach the green line before we observe a change in the trend back to bullish.
I'll also be analyzing the VIX over the next couple of weeks as it's a popular hedge against downside risk in the near term. Thanks guys. Michael.
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The information and analysis shared in this post is not financial advice. Always conduct your own analysis and research.