SPY Order Flow - Failed W Pattern Takes Us To 350.00

Hey traders,

Through the fractal-based wave measures via the OFA script, we can clearly see the what the path of least resistance should be for the SPY early this week.

Following a failed attempt to rotate back up - referred as failed W pattern - this implies heightened risks of at least a drag of price down towards the 350.00, which aligns with the 100% projection target. Time and time again these projection targets are accurate to anticipate profit taking areas.

Also, bear in mind, when a W pattern at the bottom fails, statistically, you increase the chances that the resulting M pattern at the bottom that follows is one that has juice to squeeze. Psychologically, it makes sense too, as the market has trapped buyers wrong-footed and these tend to liquidate, fueling the downtrend.

If you go back in time, my analysis shows that every time there is either a break of the M or W pattern, eventually the price heads towards these 100% measured targets, and in a few occasions, it tends to extend all the way towards the next 100% projection, in other words, the 200% extension from the bracketed area breached.

Remember the two key main features of the OFA script:

Magnitude: A major clue that will help determine the health of a trend is the type of progress by the dominant side in control of the trend. We need to ask the following question: Are the new legs in the active buy-sell side campaign as identified by the script increasing or decreasing in magnitude?

Velocity: When it comes to the distance the price moves, the magnitude is only ½ the equation. The other ½ has to do with the velocity of the move or the speed. Was the new leg created after a fast and impulsive move? Or did price make a new low or high with the movement being sluggish, compressive and taking too long to form? A good rule of thumb is to count the number of candles it took to achieve a new leg.

*** Pst - Note the linked idea, where a 3:1 risk reward target was called last week... we are getting there...

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