Chart Talk

Todays price action was a bit frustrating for me in the morning because of the low volume in the market which made  price action choppy and difficult to hold trades longer for better profit potential. As we have said in previous post there is a lot of uncertainty in the markets right now. It seems there is no real pool of buyers or sellers to push these markets intra-day in any direction with confidence. Even though I feel that the overall bias is still bearish, we can not ignore the immediate intra-day price action that might be trading to the upside. As the daily and hourly charts start to move contradictory to one another, it is important to scale back your expectation and share size until the picture becomes clearer.

Also in today’s price action, the top of the channel on the SPY daily chart held as resistance around the 111.00 area. Now two scenarios pop into my head as I try to figure out what the next move in the markets might be. Either SPY holds the 111.00 area as resistant, trading back under the 200 and 20 SMA to possibly test the 104.50 area; or the 200 and 20 SMA can hold as support, possibly letting the SPY break through the 111.00 level to test the 50 SMA near the 114.75 area. If the latter happens this will be very close in forming the tops of the second shoulder in the “Head and Shoulder” pattern forming on the weekly chart of the SPY. Either way this could give us clues into the possible future price action in the markets.

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