Welcome to Chart Chatter where we discuss various technical charts we find of interest. We cover indices, signals and stocks on different timeframes highlighting different technical techniques we use over time. We’ll focus on key observations we find relevant which readers may find of use for their own trading.
We do not present these charts as trade set-ups in this forum, but rather for discussion purposes. Feel free to add your thoughts in the comment section.
For more in-depth directional market analysis and trade set-ups please visit Services.
For other charts please visit Chart Chatter.
Taking a look at $SPX with 2 charts.
First off the cash chart on a 2 hour time frame:
A few observations:
Like many index charts we see a well formed channel of higher highs and lower highs. As long as the channel stays intact the trend remains in place. Yet as mentioned with the $VIX chart we are watching a depending wedge that has formed following the initial volatility in February and March. The 2 hour RSI has not shown an oversold reading since June as pullbacks have become shallower.
The recent new highs (which came on a negative divergence) appeared to show a break above the channel, but so far this break has proved to be a false breakout.
Price keeps defending the January highs at this point.
Also noteworthy are a number of lower open gaps on $SPX which could be price magnets should price revert lower.
At this stage there is a potential bear flag building which is more visible on $ES:
On $ES we can observe a rising wedge on the short term time frame that has broken its supporting trend line to the downside. We’ve seen a similar break in August that was swiftly repaired on a positive divergence.
The current break has found precise support at the .236 fib and has bounced from there.
At this stage the trend line break here has now lasted longer in duration than the one in August and the rising trend line is moving away higher. Bulls need to hurry to invalidate the potential bear flag and recapture the trend line or risk a move toward the lower fib levels.