SPX-Did an Island Reversal just form?
Updated
Island Reversal's are said to be some of the strongest reversal patterns...typically the strongest ones form at a significant top or bottom and are usually news driven.
While I do not feel we are at any sort of significant top; I do see today's price action as a near term reversal pattern as long as we can hold the gap that was created between Friday's close and Monday's open.
While I do not put a ton of weight on moving averages...traders have noted that price was rejected at the 200 MA (fair point thus far) and today we sliced right through the 150 EMA...two bearish signals that traders will consider.
The bull case-we must close the week above 4220 to stay above my orange line (please note: we closed last week above it):
You can read more about this chart in my Aug 13th post and why the orange line break out is important to hold.
How I see things at close today:
Daily-we have a fair amount of bearish signals.
Weekly-we are still bullish unless we close this week below my orange line.
While I do not feel we are at any sort of significant top; I do see today's price action as a near term reversal pattern as long as we can hold the gap that was created between Friday's close and Monday's open.
While I do not put a ton of weight on moving averages...traders have noted that price was rejected at the 200 MA (fair point thus far) and today we sliced right through the 150 EMA...two bearish signals that traders will consider.
The bull case-we must close the week above 4220 to stay above my orange line (please note: we closed last week above it):
You can read more about this chart in my Aug 13th post and why the orange line break out is important to hold.
How I see things at close today:
Daily-we have a fair amount of bearish signals.
Weekly-we are still bullish unless we close this week below my orange line.
Note
JPM-Great Example of a strong Island Reversal SignalNote
Island Reversal held up!
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