What the Future Holds for the S&P 500 in 2023 ES1!I have been trading the E-mini S&P 500 since 1998 so I have traded through several Bear Markets and there is a theme to them and how they end. In this video I go over the bear markets in the Dot Com Bubble and the Global Financial Crisis and compare them to this recent Bear Market. I share how I use a weekly chart with a 52 week moving average and an RSI to determine how a bear market will end. I explain why the first trading day and first trading week of the year are the most important days of the year and why traders should use TradingViews auto anchored vwap on the first day of the year to guide you for market direction throughout the rest of the trading year.
This is not Financial Advice. Past Performance is not indicative of future results. Derivatives trading is not suitable for all investors.
Anchoredvwap
SPX Breakout Fails, Bearish 1H 2023, PT $3810Primary Chart: SPX Long-Term TL and Anchored VWAPs, Fibonacci
SUMMARY:
SPX experienced a failed breakout above the downward TL. See the Primary Chart above. This suggests weakness ahead, but price may remain choppy throughout December.
Price failed right at key levels including the VWAP anchored to the all-time high on January 4, 2022, a downward trendline that has been effective YTD, and a key Fibonacci level.
Price targets will be initially set as follows: $3820 (conservative) and $3600-$3700 (aggressive).
Because December tends to experience some bullish seasonality, this may affect prices by causing choppiness, preventing prices from going straight to new lows until 1H 2023. Bullish seasonality may not be enough, however, to result in a so-called "Santa Rally."
S&P 500 ( SP:SPX ) broke above its downward trendline (TL) today. Price initially gapped higher by approximately 2.78% from yesterday's close. At first, it may have appeared that the breakout above the downward TL would be meaningful. But the breakout has largely failed. Failed breakouts provide a somewhat bearish signal. However, in this choppy and unpredictable current market this year, a series of failed breakouts both to the upside and downside frequently preceded the actual directional move in many indices, stocks and other instruments.
Whether SPX's down TL continues to hold as resistance and to contain price below it will remain of utmost importance in the coming weeks. Tomorrow, the US central bank will hold its press conference after a two-day meeting that started today, December 13, 2022. Similar to the CPI data release today, the FOMC presser tomorrow may cause excessive volatility and whipsaws like other FOMC days this year. Additional central banks in Europe (ECB, BOE, Norway, Switzerland) will be holding their meetings later this week as well.
Some traders may be wondering about a so-called Santa rally. Citi's quant strategists were quoted the other day claiming that "the Santa rally has not delivered when the returns of the first 10 months of the year are negative." Other statistics suggest that Santa rallies are less likely (though still sometimes occur) during bear-market years. Other recent charts shared publicly have also shown that bear markets show lower probabilities of a Santa rally. This does not mean the Santa rally will not occur, it just means that the odds are lower. Much will depend on what Fed Chair Powell says tomorrow and what the dot plot shows.
In any event, price action in SPX today was weak. A failed breakout does not inspire confidence that a new uptrend is forming. While price can do all sorts of unexpected things as it has all year long, it suggests more downside ahead despite better than expected inflation readings today. Price may still reach $4150 before the next downward move gets underway.
The performance of technology today supports the bearish case in SPX (and NDX). Technology is the largest weighting in both major US indices. But this sector also showed a failed breakout when considering the sector on an equal-weighted basis. US markets are unlikely to rally back to all-time highs when technology cannot change its downtrend structure.
Supplementary Chart A: Failed Breakout in Equal-Weighted Technology Sector
Negative divergence has arisen on the daily SPX charts with an RSI indicator for momentum readings. This should be monitored in days to come if a higher high than today's high is made. A higher high could negate the divergence, but a marginal new high (up to SPX 4120-4150) may not erase the divergence.
Supplementary Chart B: RSI Negative Divergence
Lastly, while some debate exists whether VIX may be subject to technical analysis, it can be helpful to pay attention to the trends and levels in the VIX at least. Today, VIX also showed a failed breakout to the downside below the range over the past week. In other words, VIX broke below the key trading range of 22.06 - 23.28 as markets ripped higher this morning. But interestingly, that breakdown ended up failing with price recovering back into the range.
Supplementary Chart C: VIX Intraday Chart with Failed Breakout and Failed Breakdown from Multi-Day Trading Range
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Author's Comment: Thank you for reviewing this post and considering its charts and analysis. The author welcomes comments, discussion and debate (respectfully presented) in the comment section. Shared charts are especially helpful to support any opposing or alternative view. This article is intended to present an unbiased, technical view of the security or tradable risk asset discussed.
Please note further that this technical-analysis viewpoint is short-term in nature. This is not a trade recommendation but a technical-analysis overview and commentary with levels to watch for the near term. This technical-analysis viewpoint could change at a moment's notice should price move beyond a level of invalidation. Further, proper risk-management techniques are vital to trading success. And countertrend or mean-reversion trading, e.g., trading a rally in a bear market, is lower probability and is tricky and challenging even for the most experienced traders.
DISCLAIMER: This post contains commentary published solely for educational and informational purposes. This post's content (and any content available through links in this post) and its views do not constitute financial advice or an investment or trading recommendation, and they do not account for readers' personal financial circumstances, or their investing or trading objectives, time frame, and risk tolerance. Readers should perform their own due diligence, and consult a qualified financial adviser or other investment / financial professional before entering any trade, investment or other transaction.
This indicator could say that we hit the bottomLooking at the Anchored VWAP Indicator (Volume Weighted Average Price)
Each time using the previous cycle bottom from the last cycle. (2015 and 2018)
It could represent something significant, return to the average, meaning the bull and bear cycles are done, and the long term trend continues, unless we enter a long term perma bear trend territory ofcourse, but if nothing fundamental has changed with crypto, I don't know yet why the long term trend would reverse, fear will turn to greed eventually.
SPY: Don't Fight the Rally, Downtrends Include Highs TooPrimary Chart: Downward Trendline from All-Time High, Various Anchored VWAPs and Fibonacci Levels
Rallies in Downtrends Are Part of the Process
Don't fight the rally in AMEX:SPY , the ETF tracking the S&P 500 ( SP:SPX ). Bear rallies are part of every downtrend. Many are debating whether equity markets have put in a lasting bottom in mid-October 2022. Although this seems unlikely given the macroeconomic headwinds and interest-rate environment, no one really knows the answer to these questions.
SquishTrade favors the continuation of trends, especially at the larger-degrees of trend, rather than reversal. So at the primary degree of trend, for example, from the all-time high, it makes sense to favor the odds that such downtrend will continue despite a reversal of trends at smaller degrees of trend (such as the uptrend shown on short-term time frames such as intraday charts and perhaps even the daily chart). But favoring the continuation merely recognizes the probability that the downtrend will resume at some point—and acknowledges that no certainty exists about whether a lasting bottom / major trend reversal has occurred. In short, no one knows what comes next. So we fall back on what is more probable and what is less probable.
It's important to remember that downtrends include both highs and lows. A downtrend is defined by lower highs and lower lows, and on the daily chart and weekly chart since the all-time highs in January 2022, higher highs and higher lows appear. Sometimes, we traders sometimes wish that price would just move smoothly downward in more or less a straight line. But this does not happen. At each lower high in this current downtrend—March 2022, June 2022, and August 2022—major rallies led to actual market highs, albeit lower ones than previously.
So don't fight the highs as they are part of every downtrend process. Even if one's macro research and technical analysis continues to support a bearish case, and the bearish case may end up prevailing in the larger degree of trend, it remains prudent to avoid fighting the rallies. This is a lesson the author has learned the hard way. Bear market rallies are powerful and sharp, often defying all logic. A prime example occurred last week, when major FAANG stocks like META, GOOGL and AMZN took major hits to the downside but indices remain stable and even rallied hard at the end of the week. Irrational? Maybe. But it's what the market wanted to do, so it's best to flow with it. And the rallies are part of the downtrend process, and in fact, they can provide better shorting opportunities than shorting at the lows expecting the downtrend to move in a straight line.
Price Has Moved into a Key Price Zone from $380 to $413 SPY
For the next couple of weeks into mid-November 2022, the following technical levels and patterns remain relevant.
1. SPY appears to have moved back into a critical price zone between $380 and $413—corresponding approximately to $3800 to $4146 on SPX. Support for this range lies at $380, which can be found from both price support over the past several months as well as Fibonacci analysis:
Notice on the Primary Chart how price has now moved back above a longer-term Fibonacci retracement level at $380, the .382 Fibonacci retracement of the entire rally from Covid 2020 lows to January 2022 highs). This is now major support, having been resistance in prior weeks.
Another key Fibonacci retracement lies at $380.05, which is the .382 retracement of the recent decline from August 16 to October 13, 2022.
This $380 level is therefore an area of strong support going into next week. Within the next couple of days, the key 21-day EMA should also move right up to about $380 (though it lies at $375.13 currently).
The yellow rectangle on the Primary Chart shows how this crucial area has served as important support and resistance—as well as a consolidation zone—for many weeks within this downtrend. Price bounced hard off this zone in late February and mid-March 2022. Price chopped in this zone in May and early June 2022, with a whipsaw break below it in mid-June 2022 that ultimately ended with price working its way back into the zone in July 2022. A whipsaw breakout above this zone occurred in August 2022, and this also failed with price falling back into the zone. Finally, in September and October 2022, price broke decisively below this zone. But now it has pushed its way back into it with another sharp rally over just two weeks (about 12 trading sessions). In short, this zone remains a very important area and magnet for SPY.
2. This crucial zone from $380 to $413 is reinforced and confirmed by the key anchored VWAPs, shown more distinctly on the supplementary chart below. The dark blue VWAP at $413 is anchored to the all-time high at January 4, 2022. A bunch of key short-term and long-term VWAPs run near the lower edge of this $380-$413 zone. These include VWAPs anchored to (i) the March 2020 Covid low (pink) at $385, (ii) the mid-August 2022 high (orange) at $382, and (iii) the mid-June 2022 low (green) at $386. On Friday, October 28, 2022, price reclaimed all these VWAPs except for the dark blue VWAP from the all-time high which remains at $413, at the top of this key zone.
Supplementary Chart A: Key Anchored VWAPs
3. The upper edge of this key zone (yellow rectangle's upper boundary) shows confluence with key Fibonacci levels, trendlines and the January 2022 VWAP. The key resistance ranges from $399 to $415. The Primary Chart shows two Fibonacci levels at $399 ($400) and two more Fibonacci levels at $413. The downward trendline from the all-time high lies right in this area as well, and because it slopes downward, it covers most of the zone. The VWAP anchored to January 4, 2022, lies at $413. Note that two of the Fibonacci levels at $399 and $413 were derived by projecting the rally in March 2022 from the low in October 2022, as the rallies (so far) appear to be somewhat similar. SquishTrade is watching to determine whether the present rally off October 13 lows will be roughly symmetrical to the March 2022 rally.
4. The target range for this rally appears to range from $399 to $413. See the yellow circle on the supplementary chart below, where two arrows each point to a confluence of levels, one at $399/$400 and the other at $413-$415. As discussed, these two upside targets are defined by Fibonacci, the YTD down trendline, and a variety of relevant VWAPs discussed in paragraph 2.
Supplementary Chart B: Target Zone for the Present Rally
The Current Rally Should Be Respected until the Primary Trend Resumes Lower
As mentioned, the trend the still remains in effect at the primary degree of trend (the trend YTD over the past 10 months). So this larger-degree trend is favored and remains the higher probability price path—but until it resumes lower, the rally should be respected.
Although the author remains bearish at the primary degree of trend, he acknowledges that markets can do whatever they want, and no one really knows with certainty what happens next. Our job as traders remains to flow flexibly with what the market is doing at all levels of trend, watching how price responds to each level. And on the shorter timeframes and smaller degrees of trend, price is bullish until markets confirm that the rally is done.
Lastly, here are some key technicals to watch to determine whether the multi-week rally remains in effect:
The anchored VWAP from the October 13, 2022 low (shown in black on the Primary Chart).
The parallel channel containing price since October 13, 2022 lows . Note that a break of this channel does not mean that the downtrend has resumed immediately, but it weakens the case for the strength of the current rally and adds "probability" to the resumption of the downtrend depending on how price responds to the key resistance levels).
The 8-day and 5-day EMA's slope and price relative to those EMAs (above / below) . Currently, they are sloped upward with price holding well above them. This supports the rally.
Price relative to the key $380 level , which is the lower level of the key price zone discussed above (yellow rectangle on Primary Chart). This level represents a line in the sand. Decisive breaks below it can quickly lead to lower prices.
Price relative to the upper and lower VWAPs coinciding with the key price zone of $380 to $413 , as shown on Supplementary Chart A.
Price response to the down trendline from all-time highs in January 2022 and the VWAP anchored to that point .
VIX's decline from highs in late September and early October 2022.
Price response after the FOMC meeting next week , though use caution—the first move, and sometimes the first and second moves, after the FOMC presser tend to be whipsaws (false moves).
It's also important to note that price rallied hard last week. Those gains would seem likely to be consolidated soon. Price reached the 50% retracement of the August 16-October 13 decline at about $390 ($389.92), which corresponds to about $3908 on SPX. Even if price does rally further to the target zone identified, such a key resistance level as this $389-$390 level likely would repel price at the first contact.
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Author's Comment: Thank you for reviewing this post and considering its charts and analysis. The author welcomes comments, discussion and debate (respectfully presented) in the comment section. Shared charts are especially helpful to support any opposing or alternative view. This article is intended to present an unbiased, technical view of the security or tradable risk asset discussed.
Please note further that this technical-analysis viewpoint is short-term in nature. This is not a trade recommendation but a technical-analysis overview and commentary with levels to watch for the near term. This technical-analysis viewpoint could change at a moment's notice should price move beyond a level of invalidation. Further, proper risk-management techniques are vital to trading success. And countertrend or mean-reversion trading, e.g., trading a rally in a bear market, is lower probability and is tricky and challenging even for the most experienced traders.
DISCLAIMER: This post contains commentary published solely for educational and informational purposes. This post's content (and any content available through links in this post) and its views do not constitute financial advice or an investment or trading recommendation, and they do not account for readers' personal financial circumstances, or their investing or trading objectives, time frame, and risk tolerance. Readers should perform their own due diligence, and consult a qualified financial adviser or other investment / financial professional before entering any trade, investment or other transaction.
Resistance Levels Where AMD Could Fail in a Bear RallyPrimary Chart: Bollinger Bands (Yellow Shaded Volatility Channel) with Fibonacci Levels, Downward TL and VWAPs
1. As discussed earlier this month, AMD remains in a severe downtrend at the primary degree of trend. This means that the path of least resistance on higher time frames remains lower unless and until AMD can do a substantial amount of price work and recover into the mid $80s (the area of the downward trendline shown on the Primary Chart) and preferably the $100.60 level (the .50 retracement of the 2020-2022 rally).
Supplementary Chart A: AMD's Linear Regression Channel Reflects Severe Downtrend
2. In every trend, however, corrective retracements and mean reversions will occur. In a downtrend, market participants commonly attempt to pick bottoms especially in former market leaders and darlings—and when this bottom-picking is combined with heavy short positioning that requires covering when major downside moves exhaust, ferocious bear rallies ensue. On October 11, 2022, SquishTrade prepared the following chart showing some of the powerful bear rallies that have occurred since November 30, 2022 (all-time high date):
Supplementary Chart B: Percentage Gains for Bear Rallies in AMD Since All-Time High
3. The VWAP anchored to the all-time high on November 30, 2022, shown on the Primary Chart, reveals that the downtrend at the primary degree of trend remains in effect. The lower highs and lower lows on daily and weekly charts support this conclusion, and the downward trendline—also shown on the Primary Chart in orange—has not been broken. Price remains significantly below both the orange downward TL and the all-time-high VWAP, showing the profound weakness in this former market leader.
4. Price has even fallen beneath the April 2018 anchored VWAP (shown in red on the Primary Chart above) having a price value of $61.95 on October 20, 2022. AMD's rapid decline since August 4, 2022 peaks appears to have stalled just after breaking below this VWAP. This 4.5 year VWAP provides strong near-term resistance at $61.95. This level of interest should be monitored during any bear rally and on any subsequent decline. Price may rally and whipsaw above it during a mean reversion only to fail and slice back below it.
5. Price has fallen beneath the .786 and .618 retracements of the entire rally from the Covid 2020 lows. These levels are at $64.08 and $85.54 respectively. This is significant because it reflects the strength of this downtrend. Any bear rally will meet strong resistance when rising back to these levels. Before considering these levels as resistance however, price must first break above the April 2018 VWAP (about $61-$62), and the 21-day EMA at about $63.31 as of October 20, 2022. Until the 21-day EMA and the April 2018 VWAP are reclaimed ($61-$63 approximately, the higher retracement levels remain irrelevant.
6. Some evidence of downside exhaustion appears on AMD's charts. These suggest that a short-covering and FOMO-driven rally may occur in the coming weeks between now and year end. SquishTrade hinted at this possibility recently with the following chart, showing how AMD was approaching the bottom of its downtrend channel:
Supplementary Chart C: October 11, 2022, Post Showing Higher Risk For Shorts Near Downtrend-Channel Support
7. On AMD's daily chart, RSI now shows a positive divergence despite price making lower lows. This is further evidence that shorts should be cautious and wary of a bear rally or, at a minimum, choppy action over the next few weeks.
Supplementary Chart D: RSI Positive Divergence on Daily Chart
8. The Bollinger Bands also suggest that the downward price move from August 4, 2022, swing highs may be nearing exhaustion. Note how the bands (set at two standard deviations) are contracting now, which suggests either chop or mean reversion in the coming days or weeks. The %B indicator in the subgraph also shows weakening downside price action. As price made lower lows over the past two months, the %B indicator made higher lows. This reflects that price moves were less powerful even though they made lower lows on the main price chart—when price cannot pierce the bands as deeply with each subsequent low, and when price eventually cannot even tag the band with a new low in October 2022, this shows price may be ready to consolidate or mean revert.
Supplementary Chart E: Bollinger Bands Signaling Exhaustion and Temporary Pause in Downtrend
9. For anyone trying to catch the bear rallies, watch out for false breakouts above resistance as discussed in the following linked post, showing a false breakout this month above a shorter-term trendline. When the primary trend is down, countertrend moves can be challenging and tricky, so tight stops make sense.
Supplementary Chart F: False Breakout above Resistance—Example from October 6, 2022
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Author's Comment: Thank you for reviewing this post and considering its charts and analysis. The author welcomes comments, discussion and debate (respectfully presented) in the comment section. Shared charts are especially helpful to support any opposing or alternative view. This article is intended to present an unbiased, technical view of the security or tradable risk asset discussed.
Please note further that this technical-analysis viewpoint is short-term in nature. This is not a trade recommendation but a technical-analysis overview and commentary with levels to watch for the near term. This technical-analysis viewpoint could change at a moment's notice should price move beyond a level of invalidation. Further, proper risk-management techniques are vital to trading success. And countertrend or mean-reversion trading, e.g., trading a rally in a bear market, is lower probability and is tricky and challenging even for the most experienced traders.
DISCLAIMER: This post contains commentary published solely for educational and informational purposes. This post's content (and any content available through links in this post) and its views do not constitute financial advice or an investment or trading recommendation, and they do not account for readers' personal financial circumstances, or their investing or trading objectives, time frame, and risk tolerance. Readers should perform their own due diligence, and consult a qualified financial adviser or other investment / financial professional before entering any trade, investment or other transaction.
Log Chart Paints Bleak Picture for NVDAPrimary Chart: Daily Chart on Log Scale with Down Trendlines, VWAPs, and Key Price and Fibonacci Levels
Some may be feeling a bit giddy over the fact that NVDA has rallied 28% off the lows. But look at those other bear rallies since the all-time highs shown on the Primary Chart. How do we know this time will be different? Expecting it to be different before a dramatic shift in the macro environment, or before a serious change in trend structure, is like hoping a lottery ticket will somehow beat the astronomical odds against it.
This post is not asserting that traders can't make money on a bear rally. Countertrend trades, though lower probability trades that remain very tricky, can be a profitable part of a traders approach. For traders willing to see both the bearish and bullish side of markets this year, some of the bear rallies could have been exceedingly profitable even if only a portion of those rallies was caught by the trade.
A logarithmic chart of this former stock market leader NVDA reveals an even bleaker picture than the linear chart. A linear chart shows that NVDA is contending with some limited degree of success with a shorter-term down TL from March 29, 2022 through the mid-August 2022 highs.That has some validity and can be watched as well going forward. But given the sheer magnitude of the decline this year, it's worth paying heeding the log version (shown on the Primary Chart) as well. The log version shows the shorter down TL being some distance above where price is currently trading, meaning that NVDA has a fair amount more work to even start to *begin* to change its trend structure.
For comparison, here is the linear chart with the shorter of the two major down TLs shown:
Supplementary Chart A: Down TL from March 29, 2022
Sure, NVDA is rallying nicely off the YTD lows from mid-October 2022. And that rally should continue to be respected until it's confirmed to be complete. A good way to gauge the rally off the lows is to use an upward trendline—here a parallel channel is used, and the lower boundary of the channel is the upward trendline off the lows. Consider the following "zoomed-in" version of the chart using an intraday 130m price bar:
Supplementary Chart B: Parallel Channel from October 2022 Low
For now, price is well contained within that channel. Shorting does not make sense until good confirmation arises that this bear rally is finished. The VWAP anchored to YTD lows (orange) also may work as a guide for the short-term bear rally. It is prudent not to fight the rally until it's weakened or has reached a major resistance level and shown signs of weakening momentum or negative divergences.
SquishTrade will be continuing to monitor both NVDA and AMD for potential shorts should this rally gather a bit more steam. A key tell is that semiconductors have decisively undercut YTD lows in June, which creates a bearish pattern generally speaking.
What are some logical price targets for this rally? Before discussing targets, a bit of a disclaimer. Countertrend targets can be a little silly to discuss—a countertrend rally can fail at any time, so picking a price target is a bit like tossing a dart with one's eyes closed. But given the parallel channel and VWAP remain supportive of the rally so far, NVDA could continue to climb until it gets squished by the FOMC presser, CPI report, or disappointing earnings.
NVDA closed at $135 today, November 1. SquishTrade thinks NVDA has a reasonable probability of reaching $140.55 (the blue line on the Primary Chart that coincides with a major swing low). Only if $140.55 is exceeded, the next price target can come into play—which is $144.36, a key Fibonacci level. After that is the $145-150 gap fill area which will also coincide with the down TL from March 2022 (on a log chart) in the next week or so.
Just because these targets make sense does not mean that they should be traded, which depends on a person's risk tolerance, time frame, ability to use stops and manage risk as well as understanding of volatility.
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Author's Comment: Thank you for reviewing this post and considering its charts and analysis. The author welcomes comments, discussion and debate (respectfully presented) in the comment section. Shared charts are especially helpful to support any opposing or alternative view. This article is intended to present an unbiased, technical view of the security or tradable risk asset discussed.
Please note further that this technical-analysis viewpoint is short-term in nature. This is not a trade recommendation but a technical-analysis overview and commentary with levels to watch for the near term. This technical-analysis viewpoint could change at a moment's notice should price move beyond a level of invalidation. Further, proper risk-management techniques are vital to trading success. And countertrend or mean-reversion trading, e.g., trading a rally in a bear market, is lower probability and is tricky and challenging even for the most experienced traders.
DISCLAIMER: This post contains commentary published solely for educational and informational purposes. This post's content (and any content available through links in this post) and its views do not constitute financial advice or an investment or trading recommendation, and they do not account for readers' personal financial circumstances, or their investing or trading objectives, time frame, and risk tolerance. Readers should perform their own due diligence, and consult a qualified financial adviser or other investment / financial professional before entering any trade, investment or other transaction.
Price Exhaustion Just Before NVDA's Earnings ReportPrimary Chart: Trendlines, VWAPs and Fibonacci Levels
Summary:
1. NVDA's bear rally shows signs of exhaustion by breakout to the upside out of its parallel channel.
2. Seasonality remains bullish so that could cause more unexpected moves to the upside before lower.
3. In the intermediate to long term, NVDA likely heads lower. The bear could resume this week. Or it could resume in a few weeks or a month or two. No need to guess, just follow price.
4. Earnings are risky binary events, and price can whipsaw or even move further than the expected move. As a hypothetical example, consider the price path shown on the primary chart, which should not be read as a forecast but a possibility around earnings.
5. In a prior post from mid-September 2022, SquishTrade showed a chart that revealed a path to about $83 for NVDA in the longer term. That target remains viable. That won't happen in a straight line and it likely won't happen in a day or a week. That chart is shown below:
This chart is found in the updates to ST's September 12 post linked here:
NVDA's countertrend price move shows signs of exhaustion just before earnings reports after market close. NVDA could react in either direction similar to FAANG and other tech stocks' reactions last month. Some tech stocks surprised to the upside with a failure soon afterwards (AAPL), while others fell further than expected (AMZN, GOOGL, META).
On November 13 (Sunday), a prior NVDA post was updated with some countertrend targets after the rally that had begun on Thursday, November 10 (post CPI data report in the US). That update can be found here . One of those targets has been reached—see the larger yellow circle on the chart above. That was the major resistance zone of $165-$174 around the Covid-low VWAP and the .786 Fibonacci retracement.
While this author provides technical analysis generally, leaving all decisions about trading to each trader's own system and rules, he avoids trading just before earnings. Most traders would be wise to do the same unless they have a strategy or edge specifically for those types of binary events. Some traders choose to trade volatility strategies around earnings—perhaps buying vol a few weeks before and selling it just before earnings, or selling vol just before earnings and closing thereafter. But those are difficult to implement and manage, though some experts appear to have viable strategies for this.
Beware the whipsaw move post earnings as well (as happened with AAPL around earnings in late October 2022), a pump and then a dump or a dump and then a pump followed by another dump. The Primary Chart shows a hypothetical example of such a whipsaw—please do not interpret the price path as a forecast, though it could by some luck work out that way. The price path is a hypothetical illustration showing what sorts of moves could occur post earnings.
Lastly, please note that although this post is designated as "short," that is the long-term view. The short-term view remains bullish until price reverses. SquishTrade prefers not to fight bear rallies but allow them to unfold until their natural ending. Finding that bear rally top for a good short is everyone's dream, though it's not particularly realistic. But no need to do so—the money can be made more consistently by catching a good piece of the next trend move rather than trying to squeeze every last penny from top to bottom (or bottom to top), which often and inevitably results in capital loss.
Thanks for reading.
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Author's Comment: Thank you for reviewing this post and considering its charts and analysis. The author welcomes comments, discussion and debate (respectfully presented) in the comment section. Shared charts are especially helpful to support any opposing or alternative view. This article is intended to present an unbiased, technical view of the security or tradable risk asset discussed.
Please note further that this technical-analysis viewpoint is short-term in nature. This is not a trade recommendation but a technical-analysis overview and commentary with levels to watch for the near term. This technical-analysis viewpoint could change at a moment's notice should price move beyond a level of invalidation. Further, proper risk-management techniques are vital to trading success. And countertrend or mean-reversion trading, e.g., trading a rally in a bear market, is lower probability and is tricky and challenging even for the most experienced traders.
DISCLAIMER: This post contains commentary published solely for educational and informational purposes. This post's content (and any content available through links in this post) and its views do not constitute financial advice or an investment or trading recommendation, and they do not account for readers' personal financial circumstances, or their investing or trading objectives, time frame, and risk tolerance. Readers should perform their own due diligence, and consult a qualified financial adviser or other investment / financial professional before entering any trade, investment or other transaction.
Zooming Way Out on AMD's Chart—$55 Key Level of SupportZooming way out on AMD's chart shows that the vicious 1-year downtrend since the all-time high in November 2021 appears modest on a weekly logarithmic chart. The downtrend has retraced only .236 of AMD's uptrend since the major low on July 27, 2015. This seems like a reasonable spot for AMD to consolidate it's recent sharp decline over the past 10-11 months.
It's clear that in the intermediate term, bulls need to hold AMD's price above $54-$55 or else the next major level to the downside comes into play. However, in the longer-term, it does not seem unreasonable to think that AMD could retrace 38.2% of its 7-year uptrend and reach $28.09, or perhaps lower looking out years.
This update provides only a brief snapshot of AMD at the secular level of trend. One technical expert whose books guide this author's work says that primary degree of trend covers about nine months to two years on average. So this seven-year chart is definitely the next level of trend higher than the primary degree.
Note that this weekly chart with multi-year levels are not intended as short-term or intermediate term forecasts. Instead, they merely provide a multi-year framework in which to view the recent downtrend. Perhaps the $55 level can be watched, however, in the coming weeks, especially with volatility around AMD's earnings next week or the FOMC presser. This level may be retested. If the level is broken in the coming weeks or months, the next major Fibonacci level becomes the target at $28.09.
Interestingly, the weekly close last week was just above the golden VWAP from the April 4, 2018, low. If AMD can hold this level, it may bounce a bit more before resuming lower.
BTC: Bulls Have Only Taken a Pawn from BearsPrimary Chart: Daily Logarithmic Chart with Anchored VWAPs, Fibonacci Levels, and Trendlines
BTC bulls seem ecstatic today after BTC broke above an intermediate-term trendline (shown in red on the Primary Chart). While this breakout could retest (or whipsaw), the likely result is that it could be a short-term positive, leading to one of two price paths in the very short term: (1) more sideways action, or (2) more another rally attempt.
But calling this a major trend reversal is misleading. It's as though bulls are calling "checkmate" when they have merely taken a pawn from the bears after bears have taken several key chess players (a couple knights and a rook and four pawns since the all-time high).
Of course, it could be the start of a major trend reversal—no one knows the future, and nothing is ever guaranteed in markets. But with inflation remaining sticky and failing to cool, with central banks remaining aggressive and hawkish, with the money supply tightening, and interest rates remaining elevated across the curve, does this look like a time when risk assets are set to run to all-time highs again? Common sense says that this is a bear rally just as with equity indices. Sure, bear rallies should be respected, perhaps even traded. They should not be shorted blindly until confirmation is given of exhaustion and reversal lower.
The irrationality of markets is analogous to July 2022, when the Fed chair spoke at the presser and market participants misinterpreted the message as a "pivot" only to find out later in August 2022 at the Fed's speech at Jackson Hole that they were badly mistaken. Even if a 50 bps rate hike occurs in December 2022, this should not be viewed as a pivot. It's a slowing of increases in the benchmark rate—not only are rates being held high, they are continuing higher albeit at a less rapid pace. And there is no guarantee that the work already done will quickly bring inflation back towards the 2% target of the US central bank.
Yes, a minor DT line from May 2022 was taken out today. It's like a pawn on the chessboard. But there are still many bearish knights, bishops and rooks remaining.
A few of the resistance levels above this down TL are shown on the chart. All of them cannot be identified without confusion. But it shouldn't be a surprise if a few more key resistance levels are taken out as price goes higher in the short-term. At some point in the coming months, the higher likelihood is that price will exhaust and the larger trend structure that remains valid should turn price lower again.
Here are a few of the levels that lie overhead with which price must content despite breaking a minor down TL today:
1. VWAP from June low = 20,738 (purple)
2. the .50 R of the recent decline = 21,684
3. the .618 R of the recent decline = 22,516
4. long-term Fibonacci level (.382 R) = 22,911
5. the .786 R of the recent decline = 23,702
6. VWAP from 3/29 = 25,708 (teal)
7. Major resistance / supply zone = 25,000 - 26,000
8. Major downward trendline from all-time highs (orange) = $26,500 (and decreasing as each day passes given its slope)
9. VWAP from the all-time high (red) = 33,500 (and decreasing as well)
Please also check out this analysis from a few days ago discussing the rally and identifying many of the same resistance levels mentioned in this post.
________________________________________
Author's Comment: Thank you for reviewing this post and considering its charts and analysis. The author welcomes comments, discussion and debate (respectfully presented) in the comment section. Shared charts are especially helpful to support any opposing or alternative view. This article is intended to present an unbiased, technical view of the security or tradable risk asset discussed.
Please note further that this technical-analysis viewpoint is short-term in nature. This is not a trade recommendation but a technical-analysis overview and commentary with levels to watch for the near term. This technical-analysis viewpoint could change at a moment's notice should price move beyond a level of invalidation. Further, proper risk-management techniques are vital to trading success. And countertrend or mean-reversion trading, e.g., trading a rally in a bear market, is lower probability and is tricky and challenging even for the most experienced traders.
DISCLAIMER: This post contains commentary published solely for educational and informational purposes. This post's content (and any content available through links in this post) and its views do not constitute financial advice or an investment or trading recommendation, and they do not account for readers' personal financial circumstances, or their investing or trading objectives, time frame, and risk tolerance. Readers should perform their own due diligence, and consult a qualified financial adviser or other investment / financial professional before entering any trade, investment or other transaction.
BTC's Downtrend Cannot Reverse While Sellers Remain in ControlPrimary Chart: Linear Regression Channel, Fibonacci-Derived Price Target, and Two Long-Term Anchored VWAPs
Many crypto enthusiasts have called for a bottom at the various lows in the BTC's downtrend over the past year. At each of the major lows, eager dip buyers swooped in and tried to pick a market bottom. The major swing lows in this bear market in BTC have occurred in December 2021, January 2022, February 2022, May 2022, and June 2022. Each low likely was considered as the bottom (a final low) by investors who pounced in to buy or averaged down on already losing positions.
Some savvy traders may have identified extreme oversold conditions in crypto markets at each of these lows and traded a 5-20 day rally to make a tidy profit, and such short-term traders are beneficiaries of the sharp bear rallies that have occurred. More patient short sellers have also benefitted from the bounces if they waited until overbought conditions materialized to position bearishly.
The linear regression channel shown on the Primary Chart shows how each interim bear-market low has been followed by a rally back to the top of the regression channel. Once there, investors who had hoped the trend had reversed of the most recent lows were once again disappointed.
How many more lows will disappoint the long-term bulls? No one knows. But the odds are stacked heavily against dip buyers for anything more than short-term rallies from extremely oversold lows at downtrend support.
Both long-term VWAPs shown on the Primary Chart reveal that the average buyer is now underwater. This means sellers remain in control. As long as sellers remain in control, and as long as downtrends remain intact, it's a low-probability bet to hope for major trend reversal—traders, however, who can remain disciplined and follow technical evidence without letting their biases interfere too much, may make handsome profits as price reaches new lows only to sharply rally back to downtrend resistance.
The longer-term VWAPs should be evaluated closely on the Primary Chart. They are both in dark blue. Note that this downtrend has caused price to break below both longer-term anchored VWAPs—one of which is anchored to the pandemic lows in March 2020, and the other of which is anchored to August 2017 lows.
Price has paused at each of the long-term Fibonacci retracements measured from the pandemic lows on March 13, 2022, to all-time highs at $69,000. Over the summer, when BTC has rallied it has shown support at the long-term .786 retracement level at $17,792.10. But at the other major retracements, price paused for some time and tested and retested before a break of the level occurred. Price has already tested this $17,792.10 level before bouncing back above it. The next time this area is tested, it should prove weaker.
Supplementary Chart A: Long-Term Fibo Retracement Levels
It is possible that price is forming a giant corrective A-B-C zigzag (or WXY pattern involving multiple zigzags) from the all-time high. Elliott Wave can be tricky, and multiple wave counts can remain valid simultaneously. Additionally, Elliott Wave counts can continually evolve as price action disproves some wave counts while opening up the validity of other alternatives at the same time. At this time, however, the entire downtrend can plausibly be viewed as a 3-wave move at the largest degree of trend, thus an ABC or WXY corrective pattern.
Supplementary Chart B: ABC or WXY Elliott-Wave Corrective Pattern from All-Time Highs with Price Target where Two Declining Waves Have Equality or Near Equality
If this is true, price could likely find a low near the 1.00 to 1.272 projections of wave A. More specifically, this means that larger-degree wave C equals the larger-wave A x 1.00 (the same numerical distance between waves A and C), or it means that the larger-degree wave C = larger-degree wave A x 1.272 ($2,292.48), another common relationship in zigzags that is considered nearly equal as well but with a Fibonacci proportion adding a twist—this is a long way down from current levels, but remains a possible EW interpretation.
In the meantime, it makes sense for experienced traders to continue to view the short side (at stronger resistance levels) as the higher probability trade.
________________________________________
Author's Comment: Thank you for reviewing this post and considering its charts and analysis. The author welcomes comments, discussion and debate (respectfully presented) in the comment section. Shared charts are especially helpful to support any opposing or alternative view. This article is intended to present an unbiased, technical view of the security or tradable risk asset discussed.
Please note further that this technical-analysis viewpoint is short-term in nature. This is not a trade recommendation but a technical-analysis overview and commentary with levels to watch for the near term. This technical-analysis viewpoint could change at a moment's notice should price move beyond a level of invalidation. Further, proper risk-management techniques are vital to trading success. And countertrend or mean-reversion trading, e.g., trading a rally in a bear market, is lower probability and is tricky and challenging even for the most experienced traders.
DISCLAIMER: This post contains commentary published solely for educational and informational purposes. This post's content (and any content available through links in this post) and its views do not constitute financial advice or an investment or trading recommendation, and they do not account for readers' personal financial circumstances, or their investing or trading objectives, time frame, and risk tolerance. Readers should perform their own due diligence, and consult a qualified financial adviser or other investment / financial professional before entering any trade, investment or other transaction.
Five Long-Term VWAPs for BTCPrimary Chart: Five Long-Term VWAPs for BTCUSD with Fibonacci Price Target
SUMMARY:
BTC continues to consolidate and chop in a tight range around $19,246 since mid-September 2022. This range is from $18,232 to $20,225 approximately. Each breakout move to the upside or downside has failed, confounding directional bears and bulls alike.
A longer-term trading range has also been in effect since June 2022. This longer-term range can be identified as between December 2018 and March 2020 VWAPs—$17,929 to $25,486. Or a simple horizontal channel can be drawn at the highs and lows from June 2020 to October 2022, which gives virtually the same range. This 5-month range aligns to some extent with the recent month's price action, which has been in an even tighter range around the $19,246 level.
Price could easily test the longer-term VWAP from December 2018 in the coming weeks. This VWAP lies at $17,929.
Price could easily test the longer-term VWAP from June 2017 in the coming months. This VWAP coincides with the Fibonacci projection at $12,184 discussed as a viable target since summer 2022.
Over the past four to five weeks (over a month), BTC has consolidated around the $19,246 level, which is a Fibonacci level of interest discussed in SquishTrade's prior BTC posts. For example, the following post (and its excerpt quoted below) analyze the specific trading range and how the breakout moves to the upside and downside have failed:
"BTC has chopped above and below this $19,246 level quite a few times, forming a tight consolidation range between and $18,232 and $20,225 approximately. Each breakout move has resulted in a bear or bull trap that fails to follow through with a sharp reversal back to the opposite side of this level."
Here is the chart posted previously showing the failed breakouts and breakdowns:
So the longer-term VWAPs can help place price action in perspective. Like other indicators, they cannot be considered a crystal ball or guarantee. They just help show the broader price environment over a longer term, which can provide a little clarity.
1. The primary trend remains downward. The VWAP anchored to the all-time high remains sloped downward and well above the current price. The average buyer since the all-time high remains well under water. See the Orange VWAP on the Primary Chart.
2. Price remains under the March 2020 anchored VWAP (shown in pink) which is anchored to the pandemic-crash lows. This positioning is bearish. But this is somewhat offset by price trading above the December 2018 anchored VWAP (shown in green). Price is stuck between these two in a sideways range since June 2022. A breakout move to the downside remains a high risk. This sideways action in between these longer-term VWAPS is analogous to the price action in the past month (mid-September to mid-October 2022) showing chop in a range from $18,232 to $20,225.
3. Price remains above the longest anchored VWAPs from the 2017 low and the 2011 all-time low (using all available BITSTAMP data. Price could easily test either of these VWAPs in the coming months given the strength and severity of the downtrend from all-time highs. From a longer-term perspective, these VWAPs can be helpful to watch.
4. The measured move using Fibonacci projections results in a target of $12,184.72, which has been discussed in previous BTC posts.
Supplementary Chart: Measured Move using Fibonacci Projections for Targets
SquishTrade still thinks the $12,184.72 target is viable especially given that price has not reversed the primary downtrend since November 2021. BTC has shown some relative strength compared to other risk assets (e.g., equity indices) by trading in a chop range sideways while the other assets have plummeted in the past month. But until BTC can change the structure materially to at least an uptrend at the primary degree of trend, it remains prudent to assume the current downtrend should be favored to resume at the primary degree of trend. Note that this Fibonacci projection aligns loosely with the VWAP anchored to the June 2017 low with a value of $13,604.01.
AAPL's Four-Month Triangle May Be BreakingPrimary Chart: AAPL's Four-Month Triangle with Various Trendlines and VWAPs
SUMMARY:
AAPL's longer-term charts show a symmetrical triangle arising from the convergence of a down trendline from January 2022 (dark blue) and an up trendline from March 2020 lows (also dark blue). This triangle appears to be in the process of breaking on arithmetic charts.
When considering that long-term trendlines don't break easily, price may retest or whipsaw above and below this long-term up trendline (from March 2020 lows) two or more times before the line can finally break decisively.
The first major level of importance below this 2020-2022 up trendline is the VWAP anchored to the 2020 lows. This VWAP lies at approximately 127.61 today. On a logarithmic chart , this VWAP coincides with a longer-term up trendline in the coming 2-4 months (see Supplementary Chart B below). This is probably the most conservative downside target if the bear market continues to pressure prices lower.
Another anchored VWAP from the January 2019 lows is approximately at 102.45. This level coincides with the .618 retracement of the 2020-2022 rally starting at the Covid lows, which equals 102.71. See Primary Chart. But before discussing these levels around $102-$103, price must first break through the .50 retracement of its 2.5-year rally from March 2020 to January 2022. The .50 retracement lies at $118.02 .
Another long-term up trendline from the January 2019 low appears on the Primary Chart in light blue. This even longer-term trendline coincides with the .618 retracement of the 2020-2022 rally off the Covid lows and the VWAP anchored to the January 2019 low. If this long-term trendline is tested next year in January or February, it would be about $102-$103, the same level as the VWAP from the January 2019 low and the .618 retracement of the 2020-2022 rally—where the yellow circle appears on the Primary Chart. Could this be where AAPL puts in a lasting bottom at 102-103?
This analysis will briefly cover some of the broader and longer-term levels for AAPL. If the downtrend continues as it has, and the macroeconomic and interest-rate environment remains challenging for equities, AAPL may reach the levels identified.
AAPL's four-month triangle has formed from the convergence of two trendlines: (1) a downward-sloping trendline from its all-time high to the present (dark blue) and (2) an upward-sloping trendline from the pandemic-crash low in March 2020 to the present (also dark blue). On an arithmetic chart, AAPL appears to have violated this multi-year upward trendline in recent days with a couple closes below the line.
One interesting perspective on the 2020-2022 trendline appears on a logarithmic chart. AAPL has shown a more decisive break of this 2020-2022 up trendline, which appears as an orange line on this Supplementary Chart below:
Supplementary Chart A: Logarithmic Chart with Upward Trendlines from March 2020 low and January 2019 Low
But when multi-month triangles like this break, and when multi-year trendlines like this break, it should be expected this could be a process rather than a quick event, assuming the trendline is valid. In part, this is because multi-year trendlines and multi-month triangles do not break and dissipate easily. The lower trendline of the triangle pattern is a multi-year trendline from the Covid lows to the present. Price does not always just break right through such an important level. On occasion, it can slice right through a level deemed consequential and long-term. But often when encountering a very important longer-term level, price can tag it, then break it repeatedly in both directions, whipsawing above and below the line a few times before following the ultimate direction it will take. Or it can break the line and then retest it from underneath a couple times as well.
Levels of importance below this trendline are the VWAP anchored to the March 2020 low. The anchored VWAP from this 2020 lows is shown in light red. Currently, that VWAP lies at $127.61, but this can change over time due to the dynamic nature of VWAP calculations. Because it is longer-term, it shouldn't change too dramatically in the coming days or weeks unless a very sizeable rally or crash takes place.
Another longer-term anchored VWAP from the January 2019 lows is approximately at 102.45. This level currently coincides with the .618 retracement of the 2020-2022 rally starting at the Covid lows, which lies at 102.71. See Primary Chart.
But before discussing this 2019 anchored VWAP and .618 retracement around $102, price must first break through the .50 retracement of its rally from March 2020 to January 2022. The .50 retracement lies at $118.02 .
Another even longer-term trendline can be drawn from the January 2019 low to the present. This trendline intersects with the .618 retracement early next year in January to February 2023 (see the yellow circle on the Primary Chart). This level also coincides with the approximate location of the 2019 anchored VWAP (dark purple)—the current trajectory of this 2019 anchored VWAP looks as if it may run near or through the yellow circle in the next 3-5 months.
Ultimately, this is not intended to be a bold, heroic prediction that AAPL will certaintly reach $127, $118, or $102. If the downtrend structure continues to remain intact, and rallies get sold, then these are viable targets. In short, this is just a technical overview showing that these levels are higher probability targets that could likely be reached if AAPL continues the path of least resistance lower.
Lastly, consider the March 2020 anchored VWAPs discussed in this post and its relationship to the same trendlines discussed except drawn on a logarithmic chart. The 2019-2022 trendline (light blue) coincides with the March 2020 anchored VWAP (or nearly does). This level will be about $127-$130 in 1-3 months. So perhaps this can be both a conservative target or a more intermediate term low in this bear.
Supplementary Chart B: Anchored VWAPs Position Relative to Logarithmic Trendlines
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AMD Stuck in a Severe DowntrendPrimary Chart: Linear Regression Channel and Two Long-Term Anchored VWAPs
No matter what method is used to analyze and define the trend, AMD has been stuck in a severe downtrend since its all-time high on November 30, 2021. Like other growth and technology stocks (except for FAANG stocks and Microsoft), AMD's November 2021 peak occurred a month before the S&P 500 ( SP:SPX ) topped on January 4, 2021.
The linear regression channel, set a two-standard deviations from the linear regression line, evidences the downtrend as of today, October 6, 2022. Price is hovering just under the linear regression channel's midline, which is the linear regression "line of best fit."
Two anchored VWAPs also confirm the validity of the downtrend as well. The first anchored VWAP is anchored to the all-time high in November 2021. That VWAP is well overhead at $102.38 as of today, and it slopes downward. Note how it has been resistance at major swing highs after sharp bear rallies over the past year. The second anchored VWAP is anchored to the pandemic-crash lows in March 2020. That VWAP also lies well overhead at $92.16 as of today. These VWAPs show that sellers remain in control despite the impressive bear rallies that have repeatedly occurred since the all-time high.
Until the structure changes materially, and that could take a fair amount of time to unfold, the downtrend remains in effect. Bounces should be sold at proper resistance levels preferably with confirmation that price has begun to reverse back lower in the short term.
If readers are interested, SquishTrade may post a shorter-term view that includes key resistance levels where the current bear rally may find strong resistance. These levels could be watched for reversals where price in the short-term rejoins the larger-degree downtrend.
________________________________________
Author's Comments:
(1) Thank you for reviewing this post and considering its charts and analysis. The author welcomes comments, discussion and debate in the comment section. Shared charts are especially helpful to support any opposing or alternative view.
(2) This technical-analysis view does not constitute a trade recommendation or trade setup. Instead, it attempts to offer technical commentary that describes and analyzes price levels, trends, price action, or the broader technical environment as of the publication date. Technical-analysis commentary does not equate to trade setups or recommendations. Within a given price environment, traders bear responsibility for their own trading strategy, risk tolerance, and time frame, and for any due diligence associated with such trades.
(3) This technical-analysis viewpoint could change at a moment's notice, e.g., when price violates a key level of invalidation for a particular view. Further, proper risk-management techniques are vital to trading success.
(4) To the extent countertrend price moves are discussed, consider that countertrend or mean-reversion trading, e.g., trading a rally in a bear market, remains higher risk and lower probability even for the most experienced traders and investors.
DISCLAIMER: This post contains commentary published solely for educational and informational purposes. This post's content (and any content available through links in this post) and its views do not constitute financial advice or an investment or trading recommendation, and they do not account for readers' personal financial circumstances, or their investing or trading objectives, time frame, and risk tolerance. Readers should perform their own due diligence, and consult a qualified / licensed financial adviser or other financial or investment professional before entering any trade, investment or other transaction.
SPX Approaches a Confluence of Resistance Levels at 3850Primary Chart: Fibonacci Levels, Symmetrical Triangle Broken in September 2021, Anchored VWAP , and Downtrend Line
On September 21, 2022, SPX's had a breakout to the downside from a multi-month symmetrical triangle pattern. This pattern was discussed in a post prior to the breakout.
But when price breaks out of technical patterns, price sometimes tends to backtest or retrace back to the very same pattern that led to the breakout. In other words, the breakout occurs with a directional move in earnest only to reverse and retrace back to the pattern or level that price had broken. In the case of SPX's symmetrical triangle, it appears that a retracement to backtest this triangle's trendline can reasonably be expected. The powerful bounce of the YTD low at 3584.13 appears to have begun with two consecutive rally days with very strong breadth readings.
Furthermore, important technical levels can often draw price in like a magnet when price starts moving in their vicinity. A confluence of important levels arise in the area around 3850 SPX. Such levels are shown on the Primary Chart above. They include the following:
VWAP anchored to the lows of the pandemic crash in March 2020, which currently is at SPX 3856.64
Fibonacci retracement levels at SPX 3851, 3867, 3899, and if price can exceed those levels on a close, 3914.85
major resistance zone that has served as both support and resistance since June 2022 at SPX 3885 to 3920
upward trendline from June 2022 lows that also served as the lower trendline of a symmetrical triangle with price at 3830-3860 over the next 5-8 trading days
downward trendline from August 16, 2022, swing highs that run right through this confluence zone in the next week or so
34-day EMA at 3870 as of October 4, 2022, which is shown on Supplementary Chart D at the end of this post
A few other Fibonacci levels are shown on the intraday price chart below. They show similar levels to the levels discussed above, with a lower level at SPX 3819.57, which is the 1.272 Fibonacci projection of the first leg of the rally off the September 30, 2022, low, as projected from the start of the second leg of the same rally. This chart also another level at 3859.09, which is the 1.618 Fibonacci projection using the same starting and ending points as the 1.272 projection.
Supplementary Chart A: Fibonacci Projections from within Current Rally Off Lows
Price may pull back a bit before reaching these targets to consolidate the impressive gains from the past two days. An intraday divergence has already appeared on the 30-minute RSI for SPX. This divergence could easily be erased. Or a further divergences could appear as price pushes a bit higher before consolidating some of the past week's gains.
Supplementary Chart B: RSI for SPX on 30-Minute Chart
What happens next? Breadth had gotten extremely poor at the lows last month. The percentage of SPX stocks below their 20-day moving average was at similar lows to June 2022 and March 2020. The blue rectangle on the chart below shows how only three negative breadth readings have approached that area in the past 2.5 years: March 2020 lows, June 2022 lows, and September 2022 lows. See Supplementary Chart C.
Supplementary Chart C: Extremely Negative Breadth Readings from September 2022 Compared to June 2022 and March 2022 Breadth Readings
However, the trend in equity indices remains downward, and until the structure changes, the odds favor trend continuation over trend reversal. But a continuation of the rally makes sense at least in the short term. And the levels discussed can be watched, and as each level is reclaimed, the next level or set of levels can be evaluated.
Lastly, the 34-day EMA was discussed earlier in this post but was not shown on the Primary Chart. It appears below. As each day passes, this value could change to some extent.
Supplementary Chart D: 34-Day EMA at SPX 3870 as of October 4, 2022
________________________________________
Author's Comments:
(1) Thank you for reviewing this post and considering its charts and analysis. The author welcomes comments, discussion and debate in the comment section. Shared charts are especially helpful to support any opposing or alternative view.
(2) This technical-analysis view does not constitute a trade recommendation or trade setup. Instead, it attempts to offer technical commentary that describes and analyzes price levels, trends, price action, or the broader technical environment as of the publication date. Technical-analysis commentary does not equate to trade setups or recommendations. Within a given price environment, traders bear responsibility for their own trading strategy, risk tolerance, and time frame, and for any due diligence associated with such trades.
(3) This technical-analysis viewpoint could change at a moment's notice, e.g., when price violates a key level of invalidation for a particular view. Further, proper risk-management techniques are vital to trading success.
(4) To the extent countertrend price moves are discussed, consider that countertrend or mean-reversion trading, e.g., trading a rally in a bear market, remains higher risk and lower probability even for the most experienced traders and investors.
DISCLAIMER: This post contains commentary published solely for educational and informational purposes. This post's content (and any content available through links in this post) and its views do not constitute financial advice or an investment or trading recommendation, and they do not account for readers' personal financial circumstances, or their investing or trading objectives, time frame, and risk tolerance. Readers should perform their own due diligence, and consult a qualified / licensed financial adviser or other financial or investment professional before entering any trade, investment or other transaction.
How the Mighty NVDA Has FallenPrimary Chart: Parallel Channel Containing NVDA's Bear Market Price Action Since Its All-Time High
ANALYSIS SUMMARY: Trading NVDA at the middle of its downtrend channel is tricky and uncertain, and should be avoided. Nevertheless, the overhead gap has a likelihood of being filled up to 150.00 USD. But the 8-day EMA will have to be recovered first. Ultimately, however, NVDA should see new lows—probably within a few weeks, and certainly with in a few months.
NVDA has fallen -61.7% from its all-time high. Some investors, with a 3-10 year view, may be interested in buying here for the long-term with the understanding that its GPU and chip business will continue to dominate and be a future tech leader. Others may wish be patient and allow the market to do its work of price discovery until it's complete.
For traders, NVDA does not present a good risk-reward setup in either direction. It's sitting right in the middle of a parallel channel that has contained price action throughout the downtrend since NVDA's all-time high in November 2022. Some of the reasons trading is extremely tricky for NVDA right now include:
Choppy price action in the indices, including SP:SPX (also traded as AMEX:SPY ) and NASDAQ:NDX (also traded as NASDAQ:QQQ );
On September 1, 2022, NVDA's price took out the July 5, 2022, low to the downside, which implies that the wave structure could likely lead to further downside ahead.
Challenging macroeconomic and monetary-policy environment, with a so-called Fed-pivot unlikely until inflation can be brought far below current levels—5-6% inflation, while encouraging given 8-9% earlier this year, will not effect a Fed pivot.
OPEX on Friday this week, leading to unexpected moves in price due to dealer and market-maker hedging, which can make directional trades more difficult than normal.
unfilled gap all the way up to $150.00, and given choppiness and recent upward momentum in indices, NVDA is unlikely to move down to new lows in a straight line.
Consider the following chart as well, which shows the volume ledges for NVDA. The resistance and supply overhead is extraordinary. Unless an investor is willing to wait potentially a very long time for NVDA to recover—and for institutions to step in and do the dirty work of putting in a final low—it may be best to watch and wait.
Supplementary Chart: 8-day and 21-day MA and Volume Ledges
Notice on the Supplementary Chart how the 8-day EMA has not yet been broken to the upside yet despite impressive strength in equity indices the last several days since the low on September 6, 2022. NVDA may break above the 8-day EMA to fill the gap. For the reasons listed above, trading NVDA right now is tricky and unpredictable.
Lastly, consider the VWAPs from all the major highs during this bear market. They're kind of foreboding and bearish, all towering far above the price. Gambling on anything other than a short-term pop or bounce in price is a low-probability bet.
Supplementary Chart B: NVDA's VWAPs placed at Major Swing Highs
Those with a fundamental analysis viewpoint may wish to rely on that instead, understanding that semiconductors and GPUs will drive AI and computers for decades to come. But the technicals suggest this fundamental view may not work out to reverse NVDA's downtrend for quite some time. Of course, bear rallies can occur in bear markets, and these can be sharp and powerful. But a fundamental-analysis viewpoint is essentially a disagreement with the market's price action, a tricky proposition given the market's impressive ability to discount all available information. Fundamental analysts believe that the market has mispriced a security or instrument, and that eventually, the market will agree with the analyst's view. Sometimes this works out well for careful analysts with billions available for research (think Warren Buffett and Berkshire Hathaway). For the rest of us, perhaps we should follow the price action for now. The author credits veteran fund manager and technical analyst David Lundgren as the source of this intelligent argument on fundamental analysis, which he has frequently has cited in interviews and publications.
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Please note that this technical-analysis viewpoint is short-term in nature and could change at a moment's notice should price move beyond a level of invalidation. Further, proper risk-management techniques are vital to trading success.
Author's Comment: Thank you for reviewing this post and considering its charts and analysis. The author welcomes comments, discussion and debate (respectfully presented) in the comment section. Shared charts are especially helpful to support any opposing or alternative view. This article is intended to present an unbiased, technical view of the security or tradable risk asset discussed.
DISCLAIMER: This post contains commentary published solely for educational and informational purposes. This post's content (and any content available through links in this post) and its views do not constitute financial advice or an investment or trading recommendation, and they do not account for readers' personal financial circumstances, or their investing or trading objectives, time frame, and risk tolerance. Readers should perform their own due diligence, and consult a qualified financial adviser or other investment / financial professional before entering any trade, investment or other transaction.
ANC: THE GOLDEN INDICTATOR STILL ACTIVE FOR BREAKOUT ANCANC: THE GOLDEN INDICTATOR STILL ACTIVE FOR BREAKOUT ANC
Since the indicator shows green zone, there is high chance we can breakout soon with ANC.
SPX Breaks Symmetrical Triangle Consolidation PatternPrimary Chart: SPX Symmetrical Triangle and Anchored VWAPs
The S&P 500 broke out of a symmetrical triangle pattern this week. On September 13, 2022, SPX's price closed below the lower trendline of the triangle, which is an upward trendline from the June 17, 2022, low. These multi-month patterns do not resolve easily every time. A backtest of the trendline that was violated commonly occurs, though it's not a certainty. A backtest in this case could mean price moves up to test the SPX 3930 to 3941 zone in the next several days, if it occurs at all.
Two anchored VWAPs are shown on the Primary Chart above. First, the anchored VWAP from the all-time high on January 4, 2022. Price moved above this level in mid-August 2022 at the end of the summer rally. But price quickly failed back below this anchored VWAP not long after the breakout. This constitutes a failed breakout, which has bearish implications for the near term outlook.
The Primary Chart also shows a VWAP anchored to the June 2022 lows. SPX's price broke above this VWAP at least three times on the daily chart, but each breakout has failed. This also has bearish implications in the near term.
The levels that matter the most right now are the symmetrical triangle's two trendlines. As long as price stays below the lower trendline of the triangle (an upward trendline from June's low), the technicals favor a continued bearish outlook. But there are some other levels that are important to watch as well. For next week, all the key SPX price levels to watch are identified below. Key resistance levels for next week include the following levels:
3980 = two key Fibonacci levels coincide here (a .50 retracement of the two-month summer 2022 rally and the .618 retracement of the early September rally)
3978 = anchored VWAP from June 17, 2022, low
3959-3961 = highs from last week's two-day consolidation, September 14-15, 2022
3927-3944 = upward trendline from June 2022 lows that is now resistance (previously support)
3899/3900 = major resistance from June and July as well as the .618 retracement of the summer rally
3886-3888 = important lows from the first half of September 2022
Key support levels for next week include the following:
3858 = anchored VWAP from March 2020 pandemic lows
3837 = low from OPEX / quad witching on September 16, 2022
3812 = 1.272 extension of the retracements of the early September 2022 rally
3783 = .786 retracement of the two-month summer 2022 rally
3721 = 1.618 extension of the two-month summer 2022 rally
3636 = the YTD SPX low
Lastly, the next major levels for the bears to conquer should be the VWAP anchored to the pandemic-crash low in March 2020. Look where SPX's price closed on Friday, September 16, 2022, just above this VWAP after a brief break below it:
Supplementary Chart A: Anchored VWAP from March 2020 low
Supplementary Chart B: Fibonacci Levels from June to August Rally and Early September Rally
THE ALL TIME RIGHT INDICATOR SHOWS INCREASE FOR ANC.We have seen increased pump on LUNA and LUNC last time: There is a high chance that ANC will see a new pump coming time.
Depending on the indicator as the chart shows it activated since 15-09-2022 for the uptrend. This means that since the breakdown trend it was red of above 4 USD and since 14-09 it active for an uptrend.
Will this golden Indicator again be right for ANC to have coming time an increase?
we will see this coming time.
This is not trading advice.
AMZN - pullback in a downtrendNASDAQ:AMZN is in a long term downtrend and is likely to continue downtrend unless market shows signs of recovery. However, It has approached a demand zone after 4 days of selling streak.
I have highlighted demand zone on the chart. I have used anchored VWAP(if you don't know how to use anchored VWAP then check it out here - www.tradingview.com ). I have anchored it on a recent swing high which seems to be acting as a dynamic resistance.
Todays candle filled the previous gap and entered in the demand zone. It found sufficient demand (buyers) to absorb the supply which caused the price to rebound with a good volume. This could be a start of a pullback in a overall downtrend. Now considering the VWAP as a dynamic resistance and a visible last support level at 133 (which could act as a resistance now), a conservative long target would be at 133 as shown in the chart.
If you have different opinion, please share your thoughts in the comment. If you like my ideas, then please show some appreciation with a like and follow. Happy and safe trading! :)
ANC next move + 50 % next weekANC next move + 50 % next week
I see capital transfers from LUNC to LUNA and ANC, I think we will see similar pumps
S&P 500 - Not Time to Get Bullish (yet)SP:SPX Hello traders. Let's take a look at the S&P500 to see if the chart matches the sentiment over the last few days.
In my opinion SPX isn't quite ready on higher time frames for serious bullishness. Others may disagree but when an objective method of trend analysis is applied to the weekly chart it becomes difficult to make a bullish argument. When two methods of objective trend identification are used and they both suggest a down trend, it is nearly impossible to draw another conclusion.
Now before anyone thinks that I'm bearish on the S&P500 let me put my personal stance in the spotlight. I'm actually trend neutral at this juncture due to the fact that higher time frames are ranging in a wide, slightly chaotic range. We'll objectively identify that as well, of course.
In the first photo of the SPX weekly chart I have used a method of trend identification identifying key levels of support and resistance. For any one of these swing highs or lows to be identified it had to pass three tests:
(1) Price action must have broken a key level of support or resistance
(2) Price must have pulled back with two consecutive candles of the same color.
(3) These candles must be red if price recently broke resistance or blue if price recently broke support
Using these rules we see that the SPX was in an objectively defined uptrend from 23 March 2020 (Covid Low) to 03 January 2022 (all time high).
During this timeframe the market was taking out objectively established swing high resistances and respecting them as a level of support. This led to higher highs and higher lows. Technical traders understand this as the definition of an uptrend.
Once the all time high was reached, the market began shifting behaviors. It began taking out objectively defined support and respecting them as levels of resistance. This led to a series of lower highs and lower lows.
Recently, SPX was able to peek above a critical resistance level but could not hold above it. This is a disruption to the down trend but does not rule out the possibility of downward continuation. There is no pattern of higher highs and lows established (yet) and there is only one higher high (yellow circles).
Currently the higher high theory is subjectively defined according to our rules and has not been clearly respected as a level of support or resistance since. Additionally the move comes from a lower low in between our two circles which suggests disruption and weakness but not necessarily a reversal.
Our second objective trend identification method will come from the anchored VWAP tools. We'll use the same two key reference points - Covid low and all time high. We see these with the blue AVWAP dynamic lines.
Price action has validated both of these anchored vwaps in the past as both support and resistance. The read is pretty simple with them. Price is bracketed on both sides by support and resistance. It has not convincingly broke and held above or below either one, leaving price in a range.
In my experience when price is ranging I do not break out my bear claws or my bull horns. I take a position of neutrality in the market and look at the extremes of the range. It is there that I find opportunity to fade the market back to the other extreme.
There is great confluence between the anchored vwaps and simple line work to suggest that these zones of support and resistance are valid. If treated as such, then the appropriate time to get bullish (or bearish) would be when price breaks out of the range. Until then my game will be to fade the range and continue to be neutral. This is also a disciplined, measured, and objective approach to technical trading and doesn't involve the predictions that many will make.
SPY in a downtrend? Where's Top? THE ANSWERS!Chart: SPY 2 week TF. The answers are both in the chart and below. SPOILER: If SPY rallies to $800, the downtrend is still valid.
Interesting:
A downtrend is defined as LOWER lows (LL) and LOWER highs (LH). Uptrend? as HL's and HH's. **
A single HIGHER high (HH) invalidates a downtrend trend in that TF.
Trend is relative to TF and can be valid in one TF but invalid in another.
A HH is established when the previous HH is superseded by a new candle's _____________ (fill in the blank).
Answer: It's the new candles **close** that takes out a previous high, **not** its own high. Once that condition has been met the new High is promoted to the status of HH.
Important:
SPY's 1 week down trend was invalidated when the HH of $393.16 established on the 28th of June, 2022 was taken out by the close of $395.09 on Friday, July 18th, 2022.
Chart: 2 week downtrend is still valid and the current 2W candle closes in 5 days. (8/12/22)
The trend remains valid if that close is below the previous HH of $417.44 established on June 2nd 2022.
Very important:
*** The high of (this) week is not relevant to the 2W downtrend. Only the candle Close on Friday (8/12/22).
Implication (not opinion):
If SPY rallies to $420, the downtrend is still valid.
If SPY rallies to $500, the downtrend is still valid.
If SPY rallies to $600, the downtrend is still valid.
If SPY rallies to $800, the downtrend is still valid.
... *as long as* price falls back to $417.44 by EOW.
The point: ... idk. Ask me in 2 weeks.
Where is "top"?:
It's the price where the last bear goes long (aka covers). In other words when there is not a single buyer left.
** Starting with Homma Munehisa, (1755) The Fountain of Gold—The Three Monkey Record of Money.
to the more contemporary: Al Brooks, (2009) "Trading Price Action Trends"
.. and everyone in between.
