Monday, 9 June 2014

S&P 500 long and short term bearish wedges may have peaked, next a plunge toward 2009 lows

The weekly chart shows that the S&P 500 is now trading just above the upper trend line of the illustrated bearish wedge, formed since the 2009 low. Wedges often complete with such a throw over. The bearish wedge is a devastatingly bearish setup. If it is the correct interpretation of market behaviour, then we will subsequently see a decline to the origin of the pattern (the 2009 low) or lower.

Daily chart shows a shorter term wedge, also with a throw over under way. The question at the moment is, has the market peaked, or will it rally higher before the pattern is complete? An initial sign that the market has made a significant peak will be a move back below the upper trend line.

The hourly chart is also worth watching, as a move downwards from the up trend channel could indicate completion of the two larger degree patterns.

All charts include futures trade for the week so far.