Rajandran R Telecom Engineer turned Full-time Derivative Trader. Mostly Trading Nifty, Banknifty, USDINR and High Liquid Stock Derivatives. Trading the Markets Since 2006 onwards. Using Market Profile and Orderflow for more than a decade. Designed and published 100+ open source trading systems on various trading tools. Strongly believe that market understanding and robust trading frameworks are the key to the trading success. Writing about Markets, Trading System Design, Market Sentiment, Trading Softwares & Trading Nuances since 2007 onwards. Author of Marketcalls.in and Co-Creator of Algomojo (Algorithmic Trading Platform for DIY Traders)

Why S&P500 is poised for a 10% correction again?

40 sec read

Last time I wrote about what could possibly go wrong with S&P500 index spotting a fundamentally overvalued reason and Price action on quarterly charts. This time it is more of a simple technical reason which explains why the 10% correction is due in S&P 500.

As of now Two Technical Indications explains a possible short term drop of 10% in SPX.
1)Rounded Top compression pattern
2)Bearish Island gap reversal pattern around 2530-2580 range

Island gap reversals are medium-term pattern which are most likely to be revisited with higher odds. Usually, the revisit will happen anywhere between 5 weeks to 30 weeks.

The good news is that there is two island gap reversal pattern which is currently open in the S&P 500. One around 2530-2580 range and another around 3300 levels.

The rounded top formation is a possible zone to look for short term correction towards Island gap reversal zone.

Which brings the potential odds of short term correction towards 2500 levels i.e approx 10% correction from current level followed by a potential upside target of reaching 3300 levels in next 6-7 months timeframe (i.e before 2020 presidential election results) in the medium term.

Rajandran R Telecom Engineer turned Full-time Derivative Trader. Mostly Trading Nifty, Banknifty, USDINR and High Liquid Stock Derivatives. Trading the Markets Since 2006 onwards. Using Market Profile and Orderflow for more than a decade. Designed and published 100+ open source trading systems on various trading tools. Strongly believe that market understanding and robust trading frameworks are the key to the trading success. Writing about Markets, Trading System Design, Market Sentiment, Trading Softwares & Trading Nuances since 2007 onwards. Author of Marketcalls.in and Co-Creator of Algomojo (Algorithmic Trading Platform for DIY Traders)

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