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PUBLIC: Another white channel top rejection

I know this is getting old, but I need to make sure everyone reading is oriented correctly before looking at the chart above.

The WHITE channel is the channel that has contained prices since the February 2016 uptrend began.  Since August 2017, there has been a PINK channel I identified rather early on and it has mostly contained prices since then.  A blogger I follow also had identified the ORANGE channel that I added to posts a week ago.

The last five days have been positive for the markets and you can see price tagged the top of the white channel today and backed off.  This same thing happened on Nov 30 when price tagged the top of the white channel, followed by the Friday selloff on Dec 1st that is indicated by the big red candle immediately after (each candlestick represents a day of trading in the SPY ETF).  Price rebounded the following Monday on the passage of the Senate Tax Bill, tagged the top of the white channel, and backed off again.

Today (big green arrow indicates today’s action) we tagged the top of the white channel yet again.  We are still inside the pink channel with the end of the week targeting $270 if we can break above the white channel.

Remember, a downtrend is defined as a high, a low, a lower high, and a lower low.  We had a potential start to the downtrend between 11/7 and 11/15 that ended when price hit the bottom of the orange channel.  We just set a new lifetime high today.  We haven’t even had a low to look for the lower high and lower low to compare against them.  An uptrend is defined as a low, a high, a higher low, and a higher high.  Check.  That is exactly what we’ve been in so far.  Enjoy it.

What to look for from here:

  1. Price breaks above the white channel and CLOSES above the white channel.  Bullish for the markets, but the real acceleration to the upside wouldn’t happen until the pink channel gets closed above as well.  If that happens…look out above.
  2. Price gets rejected at the white channel just like the previous attempts to pierce it recently and we fall back to the pink channel at a minimum with a low near $265.50 by the end of the week.
  3. Price pierces the pink channel to the downside and the orange channel would likely catch prices near $261 level or just below.  This would your first warning that something is amiss if the pink channel is breached, but the orange channel or blue dashed line (50-day moving average) would be a more significant signal the market is having problems.

What could cause any of the THREE things listed above to happen in the next few days?  On Wednesday there is an FOMC announcement; on Thursday morning the ECB makes an announcement; and at any time Congress could pass or scuttle a Tax Reform bill.

Hope you found this update helpful.

 

  1. Dr. J
    Dr. J December 14, 2017

    Well, Thursday showed us that price was rejected yet again at the white channel top trendline. Looking for the pink channel bottom on Friday near $265.50 as one possible outcome to the week.

    If you are a candlestick believer, the weekly candle on most major markets would be close (not exactly) to a “gravestone doji” if the pink channel bottom came into play for the close. Tie that in with a “look above and fail” on the weekly time frame as well, and someone could give some legitimate credence to calling a short term “top” here as buyers may have run out of fuel (for now). On a daily level, the auction theory bloggers I follow are not convinced that Wednesday’s top was legit to mark the end of this move, but I’ll take a weekly signal that the move is complete over a daily move that didn’t quite complete correctly. Time will tell. I’ll keep you all posted. Just stop on by.

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