Updated: Jun 19, 2022
What is going on with the market this week?
So far the market is consolidating within a bullish structure. Looking at the overall technicals in the SPY we can identify a very common pattern The SPY is currently in a flag pattern which is bullish in nature.
What is a flag pattern?
A flag pattern (in this case a bull flag) is when the market has an upward direction followed by consolidation or rangebound movement in the price action.
Although the pattern is bullish we need to keep in mind that even the best patterns fail. They fail due to many different factors such as bad news, bad earnings, geopolitical issues, etc. On the other hand, when they work they can be very lucrative and investors and traders alike need to take advantage of it.
What are the key points to look for?
Based on the flag pattern's consolidation range we can make some possible price predictions. In order for the flag to work the price, action has to break above the 417.50 level with good volume to validate the breakout. If there is a low volume breakout we have to assume the possibility of a false breakout.
On the bearish side, if the price breaks below the 407 level with decent volume then we can infer that the market will continue lower and more pain is coming. If it breaks down with low volume then we can assume that it's a false breakdown and the price will recover.
So what direction is the market going?
Trying to predict where the market is going is the worst thing anyone can do. Investing and trading based on valid information and knowledge in the market is an edge that individuals must possess in order to be successful. Investing time and effort in learning how the market works is essential and it's the best tool for understanding how the market reacts.
by Jose Navarro on June 5, 2022
**This newsletter is intended for educational and entertainment purposes only. Pennystocksclub13 intends to educate beginner traders with easily accessible and simplified information to shorten the learning curve. Traders should always do their due diligence and continue educating themselves about the risks involved with trading.
All charts courtesy of Thinkorswim platform. Pennystocksclub13 is not affiliated withThinkorswim.
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