Clean Bull Wedge in Stocks
Stocks finally took that dip we were anticipating. We noted that the S&P would likely test 3547, and that is exactly where it went. It is currently forming a nice bull wedge pattern. The lower bound of the bull wedge intersects 3547, so we will have nice support from the combination of this level and the trend line. Bull wedges identify a consolidation of volatility, which portends a breakout soon. Note that this pattern could break to the downside. At this time frame the Kovach OBV is quite oscillatory, so it could go either way. For ideal breakout conditions, you would want the Kovach OBV increasing while the price action is consolidating. Our wedge pattern will first have to test highs, then probably make a slight retracement before finally breaking out. If we are wrong and it breaks to the downside, it could do so with a vengeance and hit 3483, so be careful.
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