S&P Futures Weekly Price Action & Technical Analysis as on 28-AUG-2016

Last week, the market has extended the previous week’s bar, making a new all time high first, then dropping almost to the Daily lower band with a huge Daily range bar.

Notice that we have a new megaphone pattern emerging. The megaphone pattern is a disaster for trend trading, especially by entering after taking out a High or a Low. Indeed, so far most of the attempts to buy breaking signals of bullish Weekly patterns – have failed. Bearish setups wouldnt work either, as they are based on having a High from which a clear sign of weakness is being observed. But before breaking down the bearish setup level, the market, because of the megaphone pattern – does a new High first, negating the previous bearish setup before it triggers …

However, there is still a Weekly bullish pinbar in play that points at the target of 2215. Positions based on that pinbar should still be running as the price hasn’t reached nor gotten too close to the stop level (below the pinbar, at 2141.5). Also, remember that in the Monthly timeframe, there is a bigger pinbar that points to 2250 as the target (with a stop below 1981.5).

The last Daily bar formation, after the impact of Yellen’s speech, is very important.

First, although the sharp decline, it didn’t manage to touch the lower Bollinger Band, an important sign of strength. Second, it closed in the middle. Most of the times, bars like this are clues for a stopping action, in this case, the correction (down) action. The more important thing, is that we shouldn’t expect for the next days (can be even more than a week) a big move that breaks last Friday’s bar range. At the most, taking out one of the edges should most likely be followed by a false thrust, folding the price back inside that Daily range.

Pay attention also to the Weekly bar that closed considerably above the weekly 8 EMA (short term sentiment line). It is another sign of strength.

From the above distinctions, there are very good chances for August to close as a small range Doji Monthly bar.

 

S&P Futures, Weekly and Monthly charts (at the courtesy of prorealtime.com)

S&P Futures, Weekly and Monthly charts (at the courtesy of prorealtime.com)

 

 

Disclaimer: Anyone who takes action by this article does it at his own risk and understanding, and the writer won’t have any liability for any damages caused by this action.

 

Gil Ecker

getrade8@gmail.com

Market Analyst and trader

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