SPX: Caution, Pullback Ahead! One of the attributes of technical analysis is that it offers consistent tools to define and manage risk. The current SPX daily chart offers good illustration.
-The current rally is maturing at a significant resistance level created by prior support and resistance levels (February, March, and June). I think of this as a polarity zone.
-This is the polarity law: Previous support becomes resistance and previous resistance becomes support. Note that this zone was unsuccessfully tested in early June. The failure of that prior test is a warning sign.
-Oscillators (RSI and PPO) are showing signs of fatigue.
-PPO is percentage price oscillator. By presenting moving average levels as a percentage rather than a difference, it makes it easier to compare levels over time.
-The low level of the average true range (ATR) suggests complacency.
-There was an intraday bearish reversal (August 8th) to provide extra warning.
-Two well-defined levels for a pullback would be the 20d exponential moving average and the 50d moving average.
If those levels are reached, one would need to analyze market behavers and reevaluate their strategy.
By moving to the time frame of higher perspective (in this case the weekly) we see the market is also having to deal with yet another important ceiling.
In this case the almighty 30 weeks moving average (Stan Weinstein stages analysis) is acting as an important intermediate timeframe ceiling that also calls for a more cautious view. This is occurring with the weekly RSI moving into the 50 area (suggesting that the oversold has been adequately relieved).
Being fractal (using multiple time frames) is important in technical analysis. After using the microscope (daily chart) we use the macroscope (weekly chart) to see if we can obtain extra nuggets of wisdom from the big picture.
Net-net, the weight-of-the-evidence suggests that investors should be reducing their risk as the market is currently in a downtrend and has reached important resistance levels.
Eric Conrads, CMT, CAIA, CEFA
Chartered Market Technician
Zenith Capital
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Polarity
FANTOM POLARITY FLOW WEEKLY LVL After a longer-term downtrend, I expect a strong bounce from the weekly hold level - 0.96. It seems that we are targeting our base of a range, which give us great opportunity to buy Fantom.
FIRST ENTRY - 0.96 - 0.98
SECOND ENTRY 0.76900
SL - 1W CANDLE CLOSE UNDER 0.76
TARGETS : 1.18
1.32
1.37
GOOD LUCK !
TRADE ON YOUR OWN RISK, USE CORRECT POSITION SIZING.
Potential Change In Polarity [AMD]Before the major gap of march 24, AMD wasn't making new higher high's, supply was strong enough in order for the price to not break the orange resistance you can see on the price chart, this major gap broke that resistance and continued to make new higher high's, then the decreasing volume peaks along with various divergences on oscillators showed sign of a reversal, and it indeed happened, that downtrending move filled the gap of march 24 and now the price is at the level of the previous resistance.
This analysis support the hypothesis of a change in polarity, that is the previous resistance will become a support. This hypothesis is supported by a bullish divergence on the TRIX oscillator (period 18) and by decreasing volume peaks, with each peak coinciding with a previous pivot high/low.
However my timing could be bad, as the divergence might only be produced by a noisy variation, but the previous resistance is looking significant to me, and have not been naturally broken (that is broken by a variation that is not a gap).
Making analysis is kinda fun when you think about it, i'am preparing myself when the time come where i will no longer have ideas for future indicators. Brrr how terrifying
A quick lesson on trading ranges from expansion to consolidationHere's a quick lesson on how to look at trading ranges with TSLA and FB as an example. Expansion to contraction is an excellent tool to help you go a little further on your trading journey.
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