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Here we go again. Another false breakout. Another plunge to the bottom of the range. We’ve seen this act before. It has all the earmarks of another developing megaphone pattern. Back in the old days, we called these patterns “broadening tops” because they invariably broke down into significant declines.
Not any more. Megaphone patterns have become ubiquitous as the market trades in widening ranges. Like all patterns today, megaphones have the same meaning. We’re going up. In modern technical analysis, if it’s a pattern, it’s bullish.
Once the dealers are done shaking the trees, covering their shorts and picking up some long inventory for the next leg up. Sure those legs are getting shorter. Progress is slowing, reversal warnings are piling up.
It has been that way before in the past dozen years, and we’ve had only a couple of big breaks, including that one mammoth one of February-March 2020, of blessed memory.
Here in this thread, we’re only interested in the day to day. I cover the big picture outlook at Liquidity Trader’s Technical Trader, which you can follow risk free for 90 days if you are a new subscriber.
As for today, the overnight lows cracked the last couple intraday lows–they gotta make it look good– but now have made a loop de loop and look headed back up. The 5 day and 2-3 day cycle projections are unmet at 4365, but hourly cycle indicators have curled upward.
I don’t know if they’ll dip to 4365 or not, but if they do, and the hourly oscillators are at higher levels than the early overnight low, I’d bet on a minor low at that point. By the same token, if they don’t pull back over the next few hours, and instead break 4404, then they’ll probably retest yesterday’s high. I see no reason to forecast a breakout from this week’s range, either way.
Meanwhile, big picture stuff.
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Here’s a freebie on my reaction to what the Fed did this week.