SPDR S&P 500 ETF TRUSTEducation
MUST SEE - the big picture - Bounce off 20sma or March drop?
This chart should be a big part of your big picture!
1 - Look at the Oct-Dec 2018 selloff in the orange rectangle. Note how SPY closed below the 10sma in Oct, retested up in Nov, and dropped to the 20sma in Dec. This is a very common pattern you will find on price action.
2 - See the corresponding orange rectangle in RSI. RSI dipped below 50 and came back over the next month, and the 2019 rebound rally ensued.
3 - Blue rectangle shows a bearish 3-candle pattern, and also you can see that price has come down to the 20sma. The unbelievable waterfall selloff on the daily chart looks like a needed return to normal on the monthly chart. Also note RSI is coming back to 50.
4 - Red lines showing bearish divergence, and note %D stochastic (red line) is just turning down.
*** Since divergence has already happened, March could see more selling and SPY comes immediately down through 20sma. Alternatively, March could see a bounce, or retest, upward. If buyers do step in for a March relief rally, SPY should drop lower over the next few months.
*** This monthly chart should inform your daily and weekly planning. On these timeframes, there will still be upside and possibly a tug of war between buyers and sellers. On the monthly and weekly, look for the 10sma to cross below 20sma and RSI to go below 50 if we are to enter a recession.
1 - Look at the Oct-Dec 2018 selloff in the orange rectangle. Note how SPY closed below the 10sma in Oct, retested up in Nov, and dropped to the 20sma in Dec. This is a very common pattern you will find on price action.
2 - See the corresponding orange rectangle in RSI. RSI dipped below 50 and came back over the next month, and the 2019 rebound rally ensued.
3 - Blue rectangle shows a bearish 3-candle pattern, and also you can see that price has come down to the 20sma. The unbelievable waterfall selloff on the daily chart looks like a needed return to normal on the monthly chart. Also note RSI is coming back to 50.
4 - Red lines showing bearish divergence, and note %D stochastic (red line) is just turning down.
*** Since divergence has already happened, March could see more selling and SPY comes immediately down through 20sma. Alternatively, March could see a bounce, or retest, upward. If buyers do step in for a March relief rally, SPY should drop lower over the next few months.
*** This monthly chart should inform your daily and weekly planning. On these timeframes, there will still be upside and possibly a tug of war between buyers and sellers. On the monthly and weekly, look for the 10sma to cross below 20sma and RSI to go below 50 if we are to enter a recession.
Disclaimer
The information and publications are not meant to be, and do not constitute, financial, investment, trading, or other types of advice or recommendations supplied or endorsed by TradingView. Read more in the Terms of Use.
Disclaimer
The information and publications are not meant to be, and do not constitute, financial, investment, trading, or other types of advice or recommendations supplied or endorsed by TradingView. Read more in the Terms of Use.