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$SPX is looking pivotal - but that also depends on the scale.
Take a look at this channel extrapolated based on the 2009 and 2018 lows - credit to @Timeless_Crypto
Log scale says: "We are currently flipping the 10 year channel support. This bounce is for shorting. Bearish."
1/ https://twitter.com/FangTrades/status/1243001417918492672
Take a look at this channel extrapolated based on the 2009 and 2018 lows - credit to @Timeless_Crypto
Log scale says: "We are currently flipping the 10 year channel support. This bounce is for shorting. Bearish."
1/ https://twitter.com/FangTrades/status/1243001417918492672
2/9 Linear scale says: "The dump was a deviation, we're reclaiming the channel, and bears are trapped. Expect a retrace to flip the channel support, but ultimately, we'll stay within the channel. Bullish."
3/9 The linear and log scales contradict each other, so you would think that this analysis provides an ambiguous outlook at best.
But actually, there is a way to distinguish whether the linear or log view is more likely. We just have to wait for confirmation:
But actually, there is a way to distinguish whether the linear or log view is more likely. We just have to wait for confirmation:
4/9 If we break the ascending resistance above on the log scale first, then we know that the (log) S/R flip has failed; the channel has been reclaimed on both the log and linear scales. The bullish view is thus confirmed.
5/9 On the other hand, if we break the ascending support below on the linear scale, then the log scale shows that the S/R flip held, and the linear scale shows that a simple deviation back into the channel occurred before downwards continuation. The bearish view is thus confirmed
6/9 Some interesting game theory here too. Assume 50% of traders are on linear / log (there is some evidence supporting this assumption). If the setup is invalidated on log, then log traders will no longer trade based off it, but linear traders still will. Vice versa is also true
7/9 This implies that to the extent these setups are self-fulfilling prophecies, once invalidation occurs on either scale, the setup on the other scale will profit.
If 50% of traders trade along the log setup, and the other 50% do nothing, which setup is more likely to profit?
If 50% of traders trade along the log setup, and the other 50% do nothing, which setup is more likely to profit?
8/9 Anyways, applying these two trendlines back to the 2H charts, we can see the critical levels that need to hold or break. If we break above 2750 first, then the bullish view is confirmed. If we break below 2560 first, then the bearish is confirmed.
Let's see what we get!
Let's see what we get!
9/9 As an additional note, observe that both scales 'SFP'd' the 2018 low. This is bullish, although on a time scale of ten years it's not clear to me if an SFP means anything.
We'll find out soon enough though. FIN
We'll find out soon enough though. FIN
10/ Actually, not FIN. I didn't mention in the above analysis that both linear and log suggest that a small downwards movement from here is likely: confluence. Log is at resistance, linear is waiting for a retest after reclaim. So I'm shorting - 1% risk. Let's see how it goes.
