These markets were made to move! As discussed in my previous analysis from Septemeber we have massive bearish diveregence in the RSI on our legacy markets. Elections helped give us a reason for uncertainity but politics will not ever Trump the Charts. They will simply fulfill them. The chart is King and news and events will often confirm what the chart had first been telling you. What is the Chart telling us? Well it all started in around 2009. We had a recession instigated by the mortgage crisis. To get us out of this crisis our government had done many bad things that essentially "kicked the massive can down the road." Bailouts, excessive Fed printing, lowered interest rates for years, and many other things. We used electric shock resuscitation to keep our economy from collapsing into a depression. Well the electric bill from that crisis is just now showing up in our mail box. "But the economy has never been stronger" "What better time to pay your outstanding bills?"
Anyway, economic theory doesn't really matter because the markets are really all about the chart, perception and fear.
To sum up:
Purple is our consolidation range. Breaking up or down out of that will be the start of an impulsive move.
(Disclaimer: if you are only willing to invest Long/Bullish and you think that this is just a small correction and the wost has already come. Then, you must not buy into the market until we are comfortably living above the purple resistance on a weekly chart. This is very important only then will my analysis and hypothesiszed downward move be nullified) Even if somehow the market gets up to that purple line resistance it will be printing a third even stronger monthly bearish divergence and it would be a clear sell signal. If the markets make it up half way to that resistance and fall of it will be a head and shoulders reversal pattern. So not until competely clearing and holding above it would be "safe" to invest.
Green 55 Weekly is acting as short term resistance at around 272
Gold 21 Monthly is supporting our arses at 261.5
The black and bold lines you see run us back all the way a decade to our last recession. We have since stayed within these lines which have created a quite large Ascending Wedge pattern, which eventually break to the downside at some point.
Speculation: There have been very strong correlations between the crypto market and the SPY even though they are avery different parts of their repsective market cycles. The fact that BTC had made another impulse move down today could help the SPY break the purple consolidation support. Watch out for a Monday gap down where we test 260 support as well as the falling wedge support. The falling wedge support is difficult to get exact so I will be trading off of horizontal supports (like 260) and MA's.
This breakdown could start tomorrow or in 3 months. There is really no way to tell exactly. I would say there's pretty good evidence that it could happen soon, but we could also get supported and play around more in this purple flag consolidation and pull in more bulls before crashing. Like I mentioned above we could create a 3rd divergence by going all the way to the top purple resistance or part way up to create a head and shoulders patern, before coming down hard. Supports: 240, 213, and if we complete a full corrective bear market we could hit our highs from 2007 at 153.
