weekend charting 02/10/09, page-2

scilliams,

I was starting to have withdrawals.

I posted this chart of the SnP500 with the bearish rising wedge(cyan) last week, and commented that it was, at that point, immature and price would probably bounce off the cyan support line. Price obliged by staging a powerful rise on Monday, but significantly, it could not reach the resistance line, and therefore a failed rally resulted. It formed a bearish couple of candles and probed the support line. On Thursday, it broke down through the support line decisively and is now poised above the Median Line of the green Intermediate Term pitchfork which has described the entire rally since March.

These patterns usually back test a line when it gets broken, so I would be surprised to see a decisive candle tonight. It is far more likely to back test the breached support line and probe the green ML again. I would expect it to blast down through the green ML next week.

Just in case anyone is interested, last time we broke down through the ML, the breakdown haled 38.2% of the distance from the ML to the support tine of the pitchfork.