Charts I’m Watching: Mar 13, 2013

We had a precise tag on the .618 Fib level late yesterday, which often suggests a Gartley Pattern completion at the .786 (1554. 94) or a Bat Pattern at the .886 (1555.80.)

As with all potential first waves down, a deep second wave retracement is always a possibility.  So, we won’t know for sure whether 1556.77 was the top until SPX breaks above it or breaks down beneath the rising wedge (the yellow TL) and the former low 1548.24.)

UPDATE:  9:45 AM

A breakdown here would be perfectly in keeping with the Crab Pattern completions on Monday (1553 and 1555.)  It also fits with the most common rising wedge scenario where breakdowns occur around the .786 Fib retracement (or .886) of the price and time from inception to apex.

By placing this RW in both time and price grids, we can see that the .786 Fib time ratio and the .786 price ratio have both been met.

But, if SPX can rally up past 1556.77, the .886 is still up there at 1559.7. which just so happens to intersect with the 1.618 extension of the price movement from 1530.95 to 1485.01 (and the 1.272 extension of yesterday’s drop from 1556.77 to 1548.24.)

On the other hand, any move down through 1548.24 damages the odds of a higher high.  So, anyone playing the bounce off 1548 should stay nimble and manage stops accordingly.

Remember that there are a couple of small H&S Patterns currently in play.  A close below 1548.24 confirms them.

UPDATE:  10:10 AM

SPX came within one cent of yesterday’s lows, which reminds me of yesterday’s rally to one cent above the presumed right shoulder of the little H&S we were watching.  This tells me that certain someones are working very hard to keep the bull story (technically) alive.

We’ve had several busted patterns in the past couple of weeks – patterns like the H&S that are normally quite reliable.  If SPX could break out of the RW itself, that would be a nice trick for the bulls.

Just like the rising wedge, the 60-min RSI channel that convinced me to take an intra-day long position just before the close yesterday is in danger of breaking down.  Looking at the 30-min chart, its easier to see the market’s indecision.

While we’re waiting for the short-term indecision to be resolved, let’s continue with the look at the big picture we started yesterday.  It’s been hampered somewhat by technical issues with the latest version of TOS’s charting software.

When I draw channels, they don’t stay put.  They expand to a width of their own choosing and can’t be put back.  It can take 5-10 minutes just to trick the software into placing one channel properly — which makes charting a real joy!

They assure me that tonight’s release will fix this and other, lesser issues.  So, hopefully I’ll be back to full speed.  It’s normally very good software, but the frequent releases are sometimes a pain.

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