We can complicate things as much as we want. Many market participants often do. Or we can use the simplest form of technical analysis that exists: the basic trendline. Oscillator this, fibonacci that, volume, all this stuff is great. But sometimes, I think it’s important to put away the candlesticks, change it to a line chart and take a step back.
This simple strategy worked well back on April 9th after a post titled, “S&P500 Breaks 6-Month Uptrend, Now What?“. We saw a nice 5-wave decline after that and it bottomed out just a few of handles below our target. So now after the monster 16% rally off those lows, we find ourselves back in a similar situation: testing the key trendline.
If we break, then we’ll have to put up our fibonacci retracements to see how low we could go. But this is certainly a key trendline that we’re watching closely. Again, a lot of times it pays to keep it simple.
Tags: $SPY $SPX $ES_F