V-Patterns

BarroMetrics Views: Vpatterns

In S&P – At Crossroads, I spoke about a possible V-Bottom in the S&P. I received a few questions from Barros Swing students about my comments.

My fault – apologies. I ought to have made clear that I was speaking about V-Bottoms in the way traditional technical analysis uses the term (See Bulkowski V-bottom) – rather than in the Barros Swing sense. Note that for the latter, we needed to see a sustained downtrend in the  18-day – something we did not see. 

Figure 1 illustrates what Bulkowski means.

This is a chart of the E-mini, continuation contract. I have placed a Geometric Gann Fann Angle to demonstrate the point I am about to make about the angles of descent and ascent being similar before the next move. The horizontal lines 187.75 and 1983.50 align with the cash levels, 1989 and 1992 (resistance mentioned in S&P – At Crossroads). 

The descent from the Sept 19 high took place between the 45 degree angle line and the 26 degree line. The ascent from the Oct low took place between the 63 degree and 45 degree angle line. Since Oct 24, we have seen the S&P start a sideways move.

Recall that in S&P – At Crossroads, I said that Oct 29 would be a critical date in defining what the S&P is likely to do next. Whatever that may be, even if we are to see a confirmed V-bottom, before the move starts, I’d expect to see prices move below the 45 degree angle.

If we see acceptance above the resistance levels, 1987.75 (basis E-mini, nearest futures month), without seeing a change in the angle of ascent, that would another confirmation, for me, that we’ll be seeing new highs.

es-nfm-18d.png

FIGURE 1 E-mini, Nearest Futures Month