Talking Points:
- SPX 'chop-n-slop' (range-bound) trading continues until further notice
- Head-and-shoulders top turning into a triangle formation
- Remaining patient; better trading opportunities in FX
S&P 500 (stock indices in general) remain range-bound. For a short time there, it looked as if a ‘Head-and-shoulders’ pattern was being carved out, however; as time continues to elapse we are seeing the formation of a triangle become an increasingly probable outcome. It is not uncommon for H&S patterns to become a triangle. Provided that the long-term trend remains up, a triangle is more likely to trigger to the upside (acting as a consolidation pattern) rather than to the downside (reversal pattern). However, with that said, the safest way to trade triangles, or any chart pattern for that matter, is to wait for a confirmation breakout before initiating trades. At this time, range-bound price action in stocks makes trading FX a more attractive proposition.
SPX500 Daily Jan ’14 – Present
--- Written by Paul Robinson, DailyFX Research
To contact Paul, you can email him at instructor@dailyfx.com
