SP500 Boxes and Predicting February Price Swing Targets

One of the main principles of Technical Analysis (using charts) is that history repeats.

Let’s take a look at a short-term repetitive pattern – using boxes – to study the recent past and possibly project the current future in the event history repeats for a fifth time in a row.

Here’s the pure price S&P 500 index:

The yellow boxes represent the spike (extreme) high and low of a sustained “swing” or multiple day rally in price.

I connected the swing low to the swing highs until a large reversal candle developed (a down session or a period of down days) and the up-swing pattern was broken.

Notice that this pattern – shown with highlighted boxes – has repeated four times before the current rally which is at or above the “midpoint” of similar-sized boxes from 2013.

With the exception of the September 2013 smaller box (102 points), the other three boxes represented a 130 point sustained day-over-day swing.

We’ll be watching the current rally – currently up 85 points off the swing low – to see how it compares with the prior four boxes.

Will history repeat a fifth time and the index trades at least 100 points up (1,837 which is 100 points off the 1,737 low) or even 130 points up (1,867)?

It’s an over-simplified way to categorize price behavior but it’s worth watching in the days and week ahead.

Follow along with members of the Daily Commentary and Idealized Trades summaries for real-time updates and additional trade planning parameters as we watch a “hold and bounce” or “break and retrace” scenario play out in the near future.

Corey Rosenbloom, CMT
Afraid to Trade.com

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