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Equal height trend channels have been really helpful to us through the years in identifying support, resistance, and price targets on the intraday movements of the S&P 500 and, more recently, the ES futures.
Lately, not so much. I draw the channels, just like always, but instead of stopping and turning on a dime, violations of the lines seem larger and larger, and more and more frequent.
So why bother?
I don’t have an answer, other than, maybe things will return to “normal.”
But I doubt it. These are signs of increasingly disorderly, unstable markets.
That’s a trend that is unlikely to reverse any time soon. Just my opinion.
But is it really so abnormal, or is this just mental distortion?
At least cycle projections still seem to work, more often than not. Support and resistance LEVELS, that is the horizontal lines from prior highs and lows, still seem to work, in very short time spans. Although, in today’s environment, they tend to hold, only on the downside. They get broken on the upside.
And guess what! If we draw the trendlines just so, with an eye to connecting highs and connecting lows, with just a little bit of give each way, with parallel lines on the other side of the channel, they do tend to contain most of the action. Not all, but most.
That’s what we have to work with.
It has to be good enough.
So what do we have here? Short term bottom, or consolidation for another downdraft.
Don’t know. Odds are the first, but they need to clear 3937 to confirm. On the other hand, if they take out 3915, then I think we’re good for 3886, next.
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