SPY Intraday Ascending Triangle Price Target Hit

Sep 13, 2010: 11:17 AM CST

I wanted to give a quick update on the post I wrote on Friday entitled:

Intraday Triangle Forecasts SPY Breakout.

After this morning’s upside gap and quick rally, we officially & successfully  hit the initial upside target forecast by the pattern.

Go back and review the post and then take a look at the quick update chart below:

Typically, a short-term ascending triangle price pattern is easy to spot on the chart and gives a clear upside objective to play for.

To get the objective, take the height of the triangle – in this case, roughly $1.25 – and then project that  distance from the top of the ascending triangle (horizontal trendline) at the breakout price.

In this case, it was roughly $111.50, so if we add our target objective of $1.25 to our breakout level of $111.50, we get $112.75.

In my daily subscriber reports, and in prior blog updates, I’ve been holding out for an upside SPY target at least of $113, and we fell just 5 cents shy officially of that target this morning.

Take a look back also at my update from September 2nd where I forecast a likely “pattern repetition” target for a move back to the 1,130 level:

“Third Time’s the Charm?  The S&P 500 Daily Rally Pattern.”

It looks like that pattern completed exactly as anticipated as well.

I’ll do a chart update on that pattern as well.

The main idea was that, given the recent rallies from June and July that bounced similarly off 1,040, we expected the market to make a THIRD similar rally up to the 1,130 level… and that appears to be the pathway the market has taken right on schedule.

Looking forward, any further upside break above 1,130 could be met with a powerful upside breakout that would trap the short-sellers and force a potentially violent upwards short-squeeze, so watch for that development as the next potential ‘big thing’ in the market.

If not, then the market still remains within the confines of the 1,040 support at 1,130 resistance area in a sideways range, so be watching closely to see if buyers break out of the range… or fail to do so, which will then set-up short-term downside targets.

Corey Rosenbloom, CMT
Afraid to Trade.com

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

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