SPY And QQQ Consolidation Patterns
PikerTrader | Jan 10, 2013 01:54AM ET
Typically after a large move up stock and the market will consolidate before deciding where to go. This represents a time where the market is unsure where to move and it takes a market event, support or resistance break, or a pattern break to move the stock or market. We are seeing this in the market now with a bunch of different stocks and the overall market. Below are two charts of SPY and QQQ and their consolidation patterns.
SPY’s Triangle: The triangle is a consolidation pattern and a continuation pattern if it breaks. It comes from after a trend upwards or downwards. The triangle is formed from downtrend from last few days and the overall up trend from the open on 1.2.13 creates the bottom of the triangle. A break to the upside which would be 146.21, would mean a continuation of the move upwards from the end of the year. A break below of the triangle and the 144.55 level and the market should move lower.
QQQ’s Flag Pattern: The QQQ has been trending downwards since its gap up and showing some weakness but the price trend has formed a flag pattern which a break of the upwards trend line would be bullish for the tech sector. 66.89 would be a key break for this ETF and potentially move the sector higher. This pattern would be voided if the QQQ’s get below 65.91
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