Followers | 679 |
Posts | 140260 |
Boards Moderated | 40 |
Alias Born | 03/10/2004 |
Wednesday, March 16, 2016 7:44:18 AM
By Carl Swenlin
* March 12, 2016
One of my favorite chart patterns is the wedge -- rising or falling -- because it can usually be depended upon to resolve opposite the direction the wedge is moving. Specifically, a rising wedge will usually resolve downward and vice versa. Recently I saw some wedges developing on the SPY chart that reinforced my bearish feelings about the rally off the February lows. They have resolved as expected, but bearish expectations have not been realized. Let's watch the evolution of the evidence.
On Monday the wedge formation I had been following looked like it was sure to break downward. The wedge was squeezing price to a point where something had to give, and, as a rule, the steepest line is usually the weakest.
Hah! I was right . . . but not elated, because there was no follow-through the day after the breakdown.
But I noticed that a larger wedge emerged when I drew the rising bottoms line from the February low. Again the wedge resolved downward and hit a low for the week, but price bounced back to the line, making the breakdown somewhat dubious.
On Friday price rallied back into the wedge, making a higher high. Time to give up on the wedge. At this point I have realigned the rising bottoms line across the two most recent and prominent bottoms. Coincidentally, it is parallel with the rising tops line, and a rising trend channel has been formed.
The top of the channel provides us with new technical parameters, helping us estimate how much farther price might rally before hitting technical resistance. Conversely, if price fails to reach the top of the channel before falling back to the bottom of the channel, that would be a strong sign that the rally is over.
SUMMARY: The rising wedges resolved as expected, but there was no downside follow-through to break the rally. This forced us to adjust to the new evidence and develop a new rationale befitting current market behavior.
http://stockcharts.com/articles/decisionpoint/2016/03/spy-rising-wedge-delivers-but-dissapoints.html
• George.
Click on "In reply to", for Authors past commentaries.
Information posted to this board is not meant to suggest any specific action, but to point out the technical signs that can help our readers make their own specific decisions. Your Due Dilegence is a must!
• gtsourdinis
Endexx Corporation (EDXC) Leverages Global Market Trends and Legislative Reforms to Spearhead Growth in the Cannabis and Plant-Based Wellness Sectors • EDXC • Mar 27, 2024 3:01 PM
Applied UV, Inc. Announces Pricing of $2.76 Million Registered Direct and Private Placement Priced at the Market Under Nasdaq Rules • AUVI • Mar 27, 2024 2:51 PM
POET and MultiLane Collaborate to Develop High-Speed Pluggable Transceivers for AI Networks • POET • Mar 27, 2024 10:52 AM
Maybacks Global Entertainment Opens 23 More Stations in Important Major Cities • AHRO • Mar 27, 2024 9:00 AM
NxGen Brands Inc. Forecast to Deliver 140% Growth in Q1 2024 • NXGB • Mar 27, 2024 7:30 AM
Kona Gold Beverages, Inc. Strategic Advancements: Covert LLC Introduces Federally Legal D9 Gummies and Revamps Innovative eCommerce Platform, Propelling Toward $12 Million Annual Revenue Goal • KGKG • Mar 26, 2024 8:30 AM