Potential Failure in SPY
SPY created a S/R Box between 362.17 - 431.73. There was an adjustment bar formed in July. These generated a weak point (danger zone) between 362.17 - 371.04
Should you set your stochastic to be the width of the box that was created (currently 4 bars), Jan - Apr was also a 4 bar box.
When Stochastics move below 30, it is an indication that it is about to challenge the lows.
Currently the stochastic is 17.32, this is suggesting that there is 17.32 of the box range left until the bottom is breached.
The Apr 22 value for the 4 period stochastic was 1.96 suggesting weakness and a challenge of the low.
However, there is a danger zone. 371.04, if prices could bounce from here (and on Sep 23, the price is 374.22 with a low of 373.44) it shows that there is strong support here.
Should prices enter this zone, if fails to hold, the bottom will fall out. The next area of potential support could fall (based on calculations Sep 23) to between 340 - 350.
However, there is still 6 trade periods left in the month. End of the month calculation could result in a lower target range being generated.
Should you set your stochastic to be the width of the box that was created (currently 4 bars), Jan - Apr was also a 4 bar box.
When Stochastics move below 30, it is an indication that it is about to challenge the lows.
Currently the stochastic is 17.32, this is suggesting that there is 17.32 of the box range left until the bottom is breached.
The Apr 22 value for the 4 period stochastic was 1.96 suggesting weakness and a challenge of the low.
However, there is a danger zone. 371.04, if prices could bounce from here (and on Sep 23, the price is 374.22 with a low of 373.44) it shows that there is strong support here.
Should prices enter this zone, if fails to hold, the bottom will fall out. The next area of potential support could fall (based on calculations Sep 23) to between 340 - 350.
However, there is still 6 trade periods left in the month. End of the month calculation could result in a lower target range being generated.
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