Monday, 9 April 2012

S&P..You have to sit up and take notice of this pattern and recent activity!

This is perhaps the most important pattern i have seen in the recent past and without doubt the most important pattern in 2012. Here's the chart from last weeks post. A Triple tops is in effect a major turning point where after a strong bull run price has tried three times to penetrate a 'line' /resistance level and each of these three times has failed to make a significant higher high but has consistently found support from underlying market structure. There is no doubt about this pattern being confirmed already but this does not necessarily mean that even after Fridays sharp fall the triple tops may still break down and fail. However we have now broken the 'neck line' with the NFPayrolls data.
The rules of periodicity tell us the higher the time frame this or any other reversal pattern occurs in the greater the reaction will be so a triple tops evident in the 5 min or 89 tick will have a fall consistent with that time frame. The Daily time frame is the most important and although this pattern is clearly visible in the Dow cash index as 18 daily bars it is for me a borderline formation in the daily. In the Russell 2000 there is no clear pattern but in the Nasdaq & S&p there is a clear double tops. IN part because only the futures were open on Good Friday the cash indices do not show the recent price activity and will I guess gap down on reopening. This in itself is significant and adds gravity to the pattern. Add to this that Monday is also a holiday in many parts of the world and some markets will not reopen until Tuesday.
For me there is no better entry into a long term move that off the back of a pattern and I will look to add to my already short position using a price failure at some point.
I also chart various stocks and out of these I have several that are all stuck in an upsloping fork with resisting reaction lines opposing price and all are short of the CL.... I am waiting for a break one way or another

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