I can’t remember seeing this particular fractal pattern forming a “Dual” Three Push reversal pattern, so let’s take a look at the SPY (S&P 500 ETF) to see what the daily and 30min charts are showing a Dual (Fractal) “Three Push” reversal pattern… and what to expect.

First, the S&P 500 (SPY ETF) Daily Chart:

First, what is a “Three Push Reversal” Pattern? I describe it with a few examples at our free educational section.

Mainly, it is an ‘exhaustion’ pattern that is often found at major inflection points in a market.  It consists of three roughly symmetrical higher highs that are often accompanied with three lower peaks in a momentum oscillator (like the 3/10 Oscillator or Rate of Change).  It is also called a “Triple Swing” Negative Momentum Divergence.

The daily chart may be compared to a “Four Swing” or “Four Push” pattern, given that four recent swing highs have formed, though the 3/10 Oscillator is highlighting three swings as I have labeled them.

The fact that price formed a doji candle at the upper Bollinger Band adds to the odds of a price reversal from these levels.

Take a close look at volume and how almost every up day (rally day) in October was met with lower volume than the day before – a powerful non-confirmation.

Taken independently, this would be one of the lowest risk (stop above $108.50 or $109.00), highest probability (trend reversal) set-ups to take… but before you get too excited, remember that the buyers/bulls have crushed every single sell signal so far (as noted in my prior post) beginning with the July “busted” head and shoulders pattern.

Now to the 30min internal chart:

What piques my interest even more is that we’re seeing the exact same “Three Push” fractal (‘baby’) pattern on the most recent rally in October on the 30min (and 60min) intraday charts.

That fascinates me and draws my attention.  In essence, we have two major potential reversal patterns forming on two different timeframes (daily and intraday)… which could enhance the odds of a reversal.

Of course, it would mean a double pattern  failure if price continued higher.  That’s what trading is about – finding high-probability, low-risk set-ups and opportunities… particularly if you can find confluence across non-correlated trading strategies as mentioned here:

Daily 3-Push Pattern
30 minute 3-Push Pattern
Negative Momentum Divergences
Negative Volume Divergences
Upper Bollinger Band on both the Daily and 30 min frame
Dojis/Reversal Candles at the highs
Price testing prior “2009 highs” which could serve as resistance

Of course, none of this is guaranteed to produce a price reversal as expected, and bulls/buyers have shown a willingness to destroy and and all technical (chart) sell signals.

However, until we see new price highs during this particular snapshot in time… the sell signal is shaping up to be quite explosive and at least something to keep your eye on if you’re unaware of these confluences.

Corey Rosenbloom, CMT
Afraid to Trade.com

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