The Expanding channel on SP500 + Historical situations analysis

Today we will look at the current situation on the index, and we will try to understand the possible paths the price may take from here.

What are we observing right now?

a)The price is inside a clear expanding channel. This type of structure has well define zones both on the upper and lower side

b) The higher degree structure is an ascending channel

c)We asked the question. What can we expect from here? The idea was to look for similar situations in the past in which we have a well-defined higher trendline working as a resistance. Based on the resolutions of those situations, we can make a filter to trade IF the sequence of movements happens.


We will show you 6 situations using SPX where the price had a clear upper limit that was tested several times. In these examples, you will see situations in which the price could break it and situations where the price couldn't do it. Let's start:













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As you can see in these examples, we have two clear situations we should be paying attention to. Either the price is able to go above the expanding channel and make a small correction in which after that if the price makes a new local high we would have the confirmation for the new bullish movement OR the price is not able to break the line clearly, and bearish pressure comes after that.

Based on that, IF we want to develop bullish setups, we will be waiting for the price to go above the expanding channel, and our final target will be the higher trendline of the ascending channel (macrostructure)

IF the price cannot break the expanding channel, we can expect bearish scenarios like the ones we are showing with the red arrows.


Thanks for reading!