Please spare me as this is my first technical analysis on SPY. :)
Diving straight to using heikin ashi i would prefer bar charts but the chart pattern wouldn't be super visible.
A.We are in a exaggerated uptrend.
Parameters:
1. PA for the past 2 weeks have been heavily relying on the 411.80 - 412.00 range. 2. Recent Support Line @ 411.88 3. Purple Trendline is the 2017-2020 Rising Wedge Support that lead to the sell-off in 2020. 4. 3rd Support Line @ 406.87 if both supports above are violated. 5. Red Resistance @ 413.95 is for a possible uptrend in the coming days only to be reversed and continue the H&S trajectory.
Indicator Parameters:
A. Since we are in a bull market, price can become very overextended, which means we have to update our parameters our indicator to suit this market.
RSI Parameters:
1. Upper/Lower @ 80/40
Volume Parameters:
1. Volume with a 40 MA
Thesis:
Lately, we have been in a very exponential uptrend, made a breakaway gap, and continued forward. With the recent news and the chart which appears to me as a H&S, I can come to the conclusion that with no good news coming out, decreasing volume, and an RSI that appears to follow the trend, we could potentially see a reversal here. if both support lines @ 411.18 & Purple Support fail, we can potentially see a sell-off due to long covering and increasing short positions. Rolling stop losses can occur, driving the price significantly lower.
My prediction is that if we do sell-off, we could retrace back to the 406.92 level or prematurely to 409.40 (which is a relatively small support). Having calculated the price range for the head of the pattern came out to be around 6.00 which can the amount that we could retrace from the 411.88 Support Line. Knowing that there is market interest in the 406.95 Level, price should not likely violate 3rd support, if it does, then we are in a middle pullback from the macro trend.
Those are my 2 cents, feel free to rebut my argument as this provides more insight for me to consider more outcomes and potential flaws within my analysis.
while the neck line is aligned, shoulders are completely off.
Neckline should be at least aligned to the rest, thus I think its not valid
marco13leon
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@abigreen thank you, I will be looking to correct my h&s if it ever becomes one, but I doubt it.
shkspr
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@abigreen, I agree with you about HS, I didn't noticed the chart itself, I read the explanations and it sounds good to me, I saw SHORT sign and Explanation, not the pattern, I believe in SHORT term correction.
abigreen
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@shkspr stick to your plan :) I day trade, and sometimes do short swings. longer term there will be correction , no doubt, but short term as you see from Friday s price action market want to get to it's target and nothing is going to stop it , lol good luck
shkspr
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@abigreen, what's your idea about this week price action? do you believe correction triggered Friday? do you think it's going higher? or 418$ is the maximum for now, I remembered 2-3 weeks ago, it was a same situation, double top formed in QQQ and I opened short position, I toasted, market despite of Volume and all the bearish signals, went up insanely, maybe this happen again on SPY this week, usually when we believe on something rational, it goes opposite, lol
shkspr
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great analysis, I like your explanation and logic behind it, good luck :)
@marco13leon, short scenario is valid still, next week, but @abigreen mentioned HS is not valid,
abigreen
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@shkspr did you switch to short ? news are usually buy the dip.
shkspr
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@abigreen, Yes I did, let me tell you what happened, I toasted Wednesday and Thursday, I did a novice trader mistake, of course I'm novice but not that much anymore. lol, I chased market, I broke my discipline and I punished. Today I was prepared, I bought call options and I sold them at 418, then I opened a quick short position at 418, and I closed it with 100% profit around 4pm, lol. it covered my previous stupidity. and again I opened SHORT Position for 28th on IWM and SPY, very short term and small positions,
Neckline should be at least aligned to the rest, thus I think its not valid