Did We Just Repeat a Price Pattern from the February Low?

Apr 20, 2010: 1:57 PM CST

You know I’m a big fan of studying price patterns and looking for those patterns to repeat, and it appears that we have a near-identical repetition – on a smaller scale – of the move down and rally from the February low, which has played out over the last few trading days.

Let’s see them and compare.

First, the Daily S&P 500 (SPY ETF) Chart showing the Feb. 2010 low and recovery:

The most important features to note are the three-wave swing (“ABC” – A down to $107, B up to $110.50, C down to $105) which formed a positive momentum divergence on the low.

Price then shot straight up through the 20 and 50 EMA (which was in a bearish posture) then continued up – in “Popped Stops” mode – to challenge then exceed the key swing high at $115.00 (1,150 in the S&P 500 Index).

Is that pattern setting up again?

Next, the most recent price action on the intraday charts:

Price followed the ‘script’ perfectly, breaking down, forming the same “ABC” three-wave move into the April 19th low at noon, then – almost as if on cue – shattered back above the averages this morning with the gap.

Since then, we’ve had a sustained rally (pausing slightly in the afternoon session).

If bulls can keep driving price higher beyond today’s swing high at $121.00, then we could be in store for a continuation run to the $121.50 area and beyond – in exact pattern repetition.

If not, then the market followed the script but deviated at the end – which still is interesting.

These sort of posts help underscore the importance of finding market “character” or behavior, and help make sense of seemingly random moves.

Corey Rosenbloom, CMT
Afraid to Trade.com

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


6 Responses to “Did We Just Repeat a Price Pattern from the February Low?”

  1. forex_cat Says:

    Your blog is very interesting.
    Thank you.

    …my blog:
    forex chart analysis and a cat

  2. tgarfield Says:

    I was thinking that myself. Glad to know someone smart had the same thought.

  3. TheYenGuy Says:

    That certainly was a strong move on SPY up to 120.98. It is very interesting how there was a resting 112 before jumping higher. I interpret the dark candlestick two days ago to be a dark cloud cover and today's candlestick to a hanging man … http://tinyurl.com/bamcbm

    I take a look at the exciteable Russell 2000, IWM, daily; it zoomed up 1.4% compared to SPY of 0.9%; it likes to reach pivot points; one of which is 72; it closed at 72.08. Given its chart pattern; and all the others I look at, I believe the market is going down simply because it has “turned over”. If I had money, and I do not, I would have gone short just before closing.

    It's the currency traders who generally move the markets!

    Today's yen carry trade, FXE rising over FXY, came as the currency traders sold the yen and basically held the euro steady, and gave the market the confidence to move up today; and so overnight tonight, in Asia, the currency traders will set the “tenor” for tomorrow's trading.

    Perhaphs you might enjoy my article on today's trading
    Numerous Short Selling Opportunities Arise As Currency Traders Sell The Yen While Holding The Euro Steady

  4. Corey Rosenbloom, CMT Says:

    Thanks! Always good to strike a chord!

  5. perspective Says:

    food for thought


  6. Latest Zignals Trading Strategies Signals | Ready Made Media Web Says:

    […] continues in what’s set to be a mixed day for US markets. Corey of Afraid to Trade has an interesting take on the action of the past couple of days, suggesting – at least from an intraday perspective […]