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QQQ Backtesting Wedge, SPY Alternative TL now Primary

After breaking below the 30-minute rising wedge yesterday, QQQ is currently backtesting the wedge pattern from below following today's gap. With both the QQQ as well as the SPY, we are still awaiting bearish crosses below the zero level on the MACD signal line as well as the 14/34 ema histogram trend indicators.

QQQ 30-minute July 14th

QQQ 30-minute July 14th

SPY found support at the alternative wedge uptrend line that was posted yesterday (in the comment section below the previous update on these wedges) which now becomes the primary uptrend line as yesterday's reaction off that TL has validated it as the third reaction. Therefore, we still don't have any sell signals on the broad markets yet until & unless the SPY breaks below the bottom of this revised wedge pattern, QQQ reverses soon after this backtest and both the MACD & 14/34 trend indicators move from bullish to bearish. It is also worth noting that the SPY is also backtesting the former primary uptrend line (now colored blue) in tandem with the QQQ backtest.

SPY 30-minute July 14th

SPY 30-minute July 14th

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Jul 14, 2016 9:55am|Categories: Equity Market Analysis|Tags: , , , |4 Comments

4 Comments

  1. snp July 14, 2016 10:00 am at 10:00 am

    agree with wedge lines now. the blue spy line was, well, substance induced? (sarc)

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  2. dan123 July 14, 2016 10:20 am at 10:20 am

    Thanks for updates, good stuff

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  3. lee1 July 14, 2016 2:46 pm at 2:46 pm

    You have pointed out many wedges and divergences for a long time now yet the market has just gone higher and higher so not sure how valid these wedges/divergences are for helping to time the overall market.

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    • rsotc July 14, 2016 5:06 pm at 5:06 pm

      Nothing in TA works 100% of the time but even then, the vast major of the wedges (confirmed with divergence) play out, even if for a smaller than expected move. The most important thing with wedges confirmed by divergences, is that the expected move following the breakout of the wedge is typically commensurate with the time frame of the chart that the wedge developed on. E.g.- A breakout of a 5-minute wedge pattern is usually good for a move lasting a day or so while a weekly wedge pattern will typically trigger a primary trend change lasting for months.

      The most recent wedges that I posted on SPY & QQQ were 30 minute wedges with relatively shallow pullback targets although if they do play out, that could have larger implications going out to the daily charts. The next few sessions should tell us if they are going to play out or not.

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