Color Keltner Channel Chart into Highs for SP500 and NASDAQ

Bycjrosen

Sometimes it’s helpful to look at one indicator at a time, and we can do that with our special “Color Keltner Channel” Chart – as seen on the S&P 500 and NASDAQ indexes.

Let’s take a look at where price trades relative to the Keltner Channel sand what message this activity sends to the market.

We’ll start with the S&P 500:

Keltner Channels plot two ATRs – Average True Range values – above and beneath the midpoint or 20 period moving average.

While Bollinger Bands reflect standard deviation, Keltner Channel bands reflect a slightly different measurement of volatility over time.

Nevertheless, the logic is roughly the same in that pushes (or touches) of one Keltner Channel extreme tends to result in a quick reversal or retracement down against the band.

I highlighted instances where price pushed and closed BEYOND the Keltner Channel.

For reference, I’m plotting a 2.5 ATR band (black line).

The main idea here is that price pushed up off the lower Keltner Channel into the upper channel without stopping.

I suggest you compare the current action specifically with February’s bullish non-stop action and then to a lesser extend with that of April.

This is just another way to show what I’ve been highlighting for you in the prior updates:

Studying the “Repeat Pattern” that Forecasts New Highs for the S&P 500 (achieved!)

“Onwards and Upwards to New Highs for the S&P 500?

Planning a Breakout (from a Repeat Pattern) in the S&P 500

S&P 500 “Breaks on Through to the Other Side

Decision Point for the Dow Jones

We can see the same type of pattern playing out in the NASDAQ:

Notice how the NASDAQ is squeezed into the upper Band – similarly, you can chart prior examples of tests (touches) of the upper band.

While price could squeeze a bit higher as it did at the end of February 2014 (and June), do keep these levels in mind as you consider the new landscape for risk/reward management at fresh new highs.

Corey Rosenbloom, CMT
Afraid to Trade.com

Follow Corey on Twitter: http://twitter.com/afraidtotrade

Corey’s book The Complete Trading Course (Wiley Finance) is now available along with the newly released Profiting from the Life Cycle of a Stock Trend presentation (also from Wiley).

Similar Posts

|

Elliott, TICK, and Momentum Divergences Create Power Trade in QQQQ

Bycjrosen

It’s rare when all of you indicators point in the same direction, but when it does, a powerful trade can open up.  I wanted to show you such a trade that just completed in the QQQQ: Real quick, price formed a 5-wave Elliott Wave fractal into the intraday highs, but more importantly, notice it did…

Gann Squares Grid from High and Low on SP 500

Bycjrosen

Here’s a little advanced analysis, or at least an example of “chart art” using Gann Squares (Square of 9) to show the Gann Lines both from the 1,576 high (first chart) and upwards off the 667 lows (second chart).

Let’s take a look and I’ll give a quick explanation of each chart.

First, we’ll start the Gann Squares of 9 Lines from the 1,576 high, which would be used if you assume we are still in a Bear Market and will find overhead resistance.

Putting Things into Perspective with Monthly Market Charting

Bycjrosen

Intraday traders often get caught off-guard by surprise movement that defies the logic of their chosen timeframe. However, it only takes a moment to step up the perspective to the higher frame to get a sense of the bigger picture of what’s going on and what’s more important than an intraday chart pattern (or indicator…

Hourly SP500 Fibonacci Retracement Grids for the end of November

Bycjrosen

If you’re following Fibonacci Retracements, these tools have worked well in finding price support during the recent sell-off. Let’s take a look at two short-term Fibonacci Retracement grids on the S&P 500 and note where these grids converge. First, the shorter term hourly intraday grid: Starting with the October 4th low, I’ve drawn a textbook…