SPX 1-day classic patterns
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Q: What has the highest probability of occurring?
Solid uptrend.
There are 2 classic patterns 1 is approaching its target the other has not validated.
The bull flag from July is approaching its target.
The pattern projects 4570 as the target.
The ending diagonal, that appears to be in a throwover, is not validated.
This pattern projects 4140 as the target.
Objectively looking at previous structure there are a two major bearish classic patterns that failed. Specifically double tops that breakout into an uptrend as the second top is about to form. Buying the retest of the double top or former resistance was a great strategy. Bull flags also proved successful, in hindsight of course.
Since the bull flag from July is the only validated pattern the current position is long with a bias in favour of the uptrend continuing.
N.B. the current daily ranges are in the lower half of the distribution of all ranges this year. This indicates low volatility by 2021's standards.
When the rate of change crosses from -ve to +ve it acts as a good entry signal for this trend. The market gains momentum after the majority of crosses.
Low volatility and momentum are prerequisites for steady trends but are not predictors of direction.
Finally the ending diagonal is for those with skepticism. If something untoward were to happen there is a framework for trading a 10% correction. In the words of Ed Seykota,
"The trend is your friend except at the end where it bends."
Solid uptrend.
There are 2 classic patterns 1 is approaching its target the other has not validated.
The bull flag from July is approaching its target.
The pattern projects 4570 as the target.
The ending diagonal, that appears to be in a throwover, is not validated.
This pattern projects 4140 as the target.
Objectively looking at previous structure there are a two major bearish classic patterns that failed. Specifically double tops that breakout into an uptrend as the second top is about to form. Buying the retest of the double top or former resistance was a great strategy. Bull flags also proved successful, in hindsight of course.
Since the bull flag from July is the only validated pattern the current position is long with a bias in favour of the uptrend continuing.
N.B. the current daily ranges are in the lower half of the distribution of all ranges this year. This indicates low volatility by 2021's standards.
When the rate of change crosses from -ve to +ve it acts as a good entry signal for this trend. The market gains momentum after the majority of crosses.
Low volatility and momentum are prerequisites for steady trends but are not predictors of direction.
Finally the ending diagonal is for those with skepticism. If something untoward were to happen there is a framework for trading a 10% correction. In the words of Ed Seykota,
"The trend is your friend except at the end where it bends."
Nota
A test of the lower bound of trendline support.Breaks below 4425.0 set up a short to the projection.
Trade attivo
4425.0 short position4150.0 target
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