Daily Upper Band Ride – Day Seven

I was looking yesterday morning at the daily upper band ride on SPX which had been going for six days. That’s not that long for one of these, the last three lasted six, seven and eleven days. Eleven days would be getting long in the tooth for one of these and I think I can only recall one offhand lasting as many as fifteen days, but this this one could potentially run another week. The close yesterday was on the upper band at 4929, and if we see this run again through today, then the upper band will likely rise about fifteen handles into the 4944/5 area.

SPX daily BBs chart:

On the hourly chart there is a possible RSI 14 sell signal brewing now and the high yesterday broke up slightly through the obvious rising wedge resistance trendline. If that trendline holds then that break above was a bearish overthrow, and then next move would be to reverse towards wedge support, currently in the 4815 area, and then to break down from it into a retracement of the move up from the October low at 4103.78 which would ideally deliver a 50% retracement of the move back into the 4500s, where I’d be watching the backtest of the July high at 4607 or the support/resistance level in the 4540-50 area.

This pattern scenario could take another day of the daily upper band ride, but any more than that and I would be looking at the two high quality alternative trendlines that I have marked in above in dotted trendline, and the first (wedge) of those is currently in the 4965-70 area, and the second (channel) is currently in the 5050-50 area.

SPX wouldn’t have to respect either of those higher trendlines of course, but those are the three high quality resistance trendline options, and the odds are that one of the three is the right one.

SPX hourly chart:

NDX has been lagging SPX in recent days, but is also testing a high quality wedge resistance trendline. There won’t be any hourly divergence there, but a retest (and fail there) of the current high at 17665.26 would set up some weak negative divergence on the daily chart.

NDX hourly chart:

I don’t often mention past calls that did well, as it seems like boasting, but I understand that’s called marketing nowadays, and some of those are pretty cool, so here is one today.

As the COVID crash was playing out I posted the NIKKEI chart below on 15th March 2020 talking about the possibility that the next big move would be to the IHS target in the 35000 area……..

NIKKEI monthly chart (15th March 2020):

…. and a few days ago NIKKEI reached that target, having more than doubled from that low in March 2020. That really was a lovely pattern setup and was a pretty sweet call. .

NIKKEI monthly chart:

I’m keeping an open mind on direction here, and this really has been a strong trending move up, and it has been the kind of move that can just run over divergences, sell signals, trendlines and so on. These moves are hard to call and will find a high. There is decent trendline resistance and negative divergence here though, and it could end here. If so, the daily upper band ride would likely end today or tomorrow.

I’ve stopped using a custom domain for my blogger posts so the address for those has reverted back to https://channelsandpatterns.blogspot.com/

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Written by:

Richard Chappell

Jack is a 20 year retail trading veteran and co-founder of The Art Of Chart. He started his blog at channelsandpatterns.net in 2010 and since has published tens of thousands of charts looking at hundreds of trading instruments across most tradeable markets, doing original work mainly in the areas of trendlines, patterns and divergences. At The Art Of Chart Jack has taught trading skills, technical analysis, and the discipline and trader psychology that allow those to be used effectively in trading.

30th Jan 2024

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