SPY COULD FORM A MACRO WEDGE - INTEREST RATES
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Get your tin foil hats ready for this one folks. It's a long shot, but just throwing this perspective out there to see how it lands in a few weeks.
SPY loves to form wedges, especially after the breakout of other patterns.
In this case, SPY was forming quite the strong channel since September, until it broke out in January (see chart below)
Now that it has broken out, and volatility is at its highest, one potential outcome is SPY / SPX forming a wedge to calm the storm.
Here is where it gets interesting - charts also love symmetry. The price action on one side of a pattern often times matches the price action on the opposite side as well (time is a factor that affects how this looks on the chart, either squeezing or elongating the trends)
Before SPY dumped in January, it had a stair stepping, wedge-like pattern on it's way up - which took 200 days to reach ATH from $415 (a key level). SEE BELOW
Now here is where the tinfoil hat comes on. So far, SPY has mimicked the double bottom formation first seen on the left side. SEE BELOW
Notice both form a 'W' shape, with the left side having less volatility, and therefore having more time to form price action (30 days)
The right side having more volatility, formed a similar pattern in 10 days. 1/3 of the time
This would make sense if we also look at the volume, which is on average 2.4x higher than last September / October.
Following this same logic, we should reach 415 in approximately 1/3 the time it took for SPY to reach ATH from 415 (200 days mentioned previously.)
That means it would take ROUGHLY 66 days to reach 415 from ATH -- March 11 -- The Friday before the first released rate hike and when the FED will release their interest rate plans. This would put the March 15 - 16 FOMC meeting right at the vertex of this wedge.
The MACD also confirms this in a way. If SPY continues its current MACD trend on the Monthly, it should approach baseline in March, flipping red (Take a look at SPY chart, and what happens when the monthly MACD flips red without a catalyst like the FED meeting.)
It also means we could see a more volatile spike to around 460 in the very short term (first week of February or so) and then a trend down from there.
What are some problems with this perspective? It's based entirely off of connecting dots that may not even be there. Also, with all of the news and volatility happening right now, SPY could do something completely un-organized and un-predictable, but it doesn't hurt to try.
This post was written largely for fun, and I'll keep the analysis in the back of my mind. However, I do not plan on basing any of my strategies or trades on the idea alone.
Let's see how poorly this ages ;)
- Thanks for reading!
SPY loves to form wedges, especially after the breakout of other patterns.
In this case, SPY was forming quite the strong channel since September, until it broke out in January (see chart below)
Now that it has broken out, and volatility is at its highest, one potential outcome is SPY / SPX forming a wedge to calm the storm.
Here is where it gets interesting - charts also love symmetry. The price action on one side of a pattern often times matches the price action on the opposite side as well (time is a factor that affects how this looks on the chart, either squeezing or elongating the trends)
Before SPY dumped in January, it had a stair stepping, wedge-like pattern on it's way up - which took 200 days to reach ATH from $415 (a key level). SEE BELOW
Now here is where the tinfoil hat comes on. So far, SPY has mimicked the double bottom formation first seen on the left side. SEE BELOW
Notice both form a 'W' shape, with the left side having less volatility, and therefore having more time to form price action (30 days)
The right side having more volatility, formed a similar pattern in 10 days. 1/3 of the time
This would make sense if we also look at the volume, which is on average 2.4x higher than last September / October.
Following this same logic, we should reach 415 in approximately 1/3 the time it took for SPY to reach ATH from 415 (200 days mentioned previously.)
That means it would take ROUGHLY 66 days to reach 415 from ATH -- March 11 -- The Friday before the first released rate hike and when the FED will release their interest rate plans. This would put the March 15 - 16 FOMC meeting right at the vertex of this wedge.
The MACD also confirms this in a way. If SPY continues its current MACD trend on the Monthly, it should approach baseline in March, flipping red (Take a look at SPY chart, and what happens when the monthly MACD flips red without a catalyst like the FED meeting.)
It also means we could see a more volatile spike to around 460 in the very short term (first week of February or so) and then a trend down from there.
What are some problems with this perspective? It's based entirely off of connecting dots that may not even be there. Also, with all of the news and volatility happening right now, SPY could do something completely un-organized and un-predictable, but it doesn't hurt to try.
This post was written largely for fun, and I'll keep the analysis in the back of my mind. However, I do not plan on basing any of my strategies or trades on the idea alone.
Let's see how poorly this ages ;)
- Thanks for reading!
Trade attivo
For anyone following this idea, so far it has been spot on.. hmmmm - Is this a good or a bad thing?Nota
So far this chart idea is still in effect!Trade attivo
this has been spot on so far
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