How technical analysis tools can be helpful in your day-to-day t
On May 11th I wrote about the S & P …. the first area of support is 3948 (base of channel on the daily chart ) and the 38.2% retracement at 3815 (of the move 2020-2022). On Friday the low was 3859, well within this band. We also note the divergence of the daily RSI (relative strength indicator). This measures momentum and we can clearly see that although the price made a new low, that the RSI did not, i.e the RSI has diverged from price. This reflects a loss of downside momentum.
If short we would tighten up the stops….The second thing of note on the daily chart is something called an Andrews pitchfork, the top of which coincides nicely with the 55-day ma at 4334 and the 4308 4th May high. This suggests that rallies should fall well ahead of this area for an overall bear trend to remain entrenched. I am a big fan of Andrew’s pitchforks and channels (which are similar).
Information about Andrews pitchfork (taken from John Murphy’s Chart School):
Developed by Alan Andrews, Andrews' Pitchfork is a trend channel tool consisting of three lines; a median trend line in the center with two parallel equidistant trend lines on either side. These lines are drawn by selecting three points, usually based on reaction highs or lows moving from left to right on the chart. As with normal trend lines and channels, the outside trend lines mark potential support and resistance areas. A trend remains in place as long as the Pitchfork channel holds; reversals occur when prices break out of a Pitchfork channel.
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If short we would tighten up the stops….The second thing of note on the daily chart is something called an Andrews pitchfork, the top of which coincides nicely with the 55-day ma at 4334 and the 4308 4th May high. This suggests that rallies should fall well ahead of this area for an overall bear trend to remain entrenched. I am a big fan of Andrew’s pitchforks and channels (which are similar).
Information about Andrews pitchfork (taken from John Murphy’s Chart School):
Developed by Alan Andrews, Andrews' Pitchfork is a trend channel tool consisting of three lines; a median trend line in the center with two parallel equidistant trend lines on either side. These lines are drawn by selecting three points, usually based on reaction highs or lows moving from left to right on the chart. As with normal trend lines and channels, the outside trend lines mark potential support and resistance areas. A trend remains in place as long as the Pitchfork channel holds; reversals occur when prices break out of a Pitchfork channel.
Disclaimer:
The information posted on Trading View is for informative purposes and is not intended to constitute advice in any form, including but not limited to investment, accounting, tax, legal or regulatory advice. The information therefore has no regard to the specific investment objectives, financial situation or particular needs of any specific recipient. Opinions expressed are our current opinions as of the date appearing on Trading View only. All illustrations, forecasts or hypothetical data are for illustrative purposes only. The Society of Technical Analysts Ltd does not make representation that the information provided is appropriate for use in all jurisdictions or by all Investors or other potential Investors. Parties are therefore responsible for compliance with applicable local laws and regulations. The Society of Technical Analysts will not be held liable for any loss or damage resulting directly or indirectly from the use of any information on this site.
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