Thursday, 12 August 2010

16:09 BST - SPX UPdate - 5 min pitchorks

Some interesting fork action going on on the 5 minute chart:

SPX 5 min pitchforks:

You can see price broke down out of the green fork on Tuesday's gap down and the rally later on Tuesday was a back test of the broken lower line of that fork. It also created a high from which the downward blue and red forks could be drawn.

Yesterday's decline took price quickly down to the lowerline of the blue fork and it pretty much chopped around there for most of the day, which was bearish.

This morning's gap was a bearish break of the blue fork and took price to the median line of the steeper red fork. Its bounced from there but, so far, it looks like a backtest of the broken blue fork.

If things are really bearish we should fail here and drop back to the median line of the steeper red fork and then below that too.

Obviously, in elliott wave terms, if we completed three or five waves down from 1129.24, we might expect more of a bounce back up. In that case, I'd look to the upper line of the red fork and the median line of the blue fork to provide some resistance. They're not guaranteed to hold price back, but its a place where you might be on the look out for a possible reversal back down.