S&P Wihin a Larger Consolidation

22 ott 2018

We had found support at a parallel line from a respective channel that was seen by connecting highs on March 5 and Sept 17. Using that same lane's slope we created an identical one for the lower parallel.

Since forming a short-term bottom there we have retraced up to the .382 and found resistance at that level and are making our way down. This could be seen as the "h" pattern which often plagues bear markets. If this "h" breaks it's lows and breaks the brown support line then I believe you will have a nice 3.5% drop to make a slow risk short play on.

How did I get 3.5% for a target? Well, make a trendline from our tops Jan 26 & Sept 20. Copy/paste that same line at the lows of our consolidation pattern Feb 9 & April 2. I am looking for price action to break out of the brown flag and find support at the purple flag construct. There is no entry to be made through until the Oct 11 recent lows are broken at 270.38 and or our brown line is broken. Until then, the price can do whatever it wants while inside these flags, even testing the top of its resistance lines if it so chooses. If it would happen to get to the top of either the brown or the purple lines then those would also be good shorting setups.

Last week we found support at the daily 200 MA. Breaking this level would be very significant, we would then be living below it and finding resistance at the 200, around 276 currently.

I have included some arrows at levels that I feel are the safest places to short. A break of our current flag. A retrace up to our initial breakdown level of 286.37. Getting all the way up to a higher high within our flag pattern to create a third monthly divergence at 300. Or any break of the purple larger flag pattern.