Week of April 8th, 2024

Rising wedge breakdown begins

Apr 06, 2024

Hi everyone!

This past week we finally got our first decisive breakdown from the wedge. This breakdown is now active and needs follow-through next week however we are finally out of the wedge and that predictable repetitive price action we’ve had for several months now is coming to an end. I have been warning the past several weeks that we were nearing the point where one of these next tests of the wedge will not hold and it will lead to a breakout and shift from this recent trend.

Last week I mentioned in our analysis of SPX:

Week of April 1st, 2024

Jovan Roche

March 30, 2024

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“BTD continues to be in play as long as above 5179. A fail of 5179 is the first warning to bulls that this rising wedge is about to break down.”

We started the week with a sell toward the bottom of the wedge followed by a breakdown and a lift off my 5179 level before a sharp sell off back to below it and a recovery on Friday. This price action is typical as bulls are fighting for their life not to lose this level. However, if this level gives up next week, we can easily see another 200 pts lower.

I will keep mentioning this because the risks are currently elevated: Crucial for the upcoming weeks: "Buy the Dip" (BTD) strategy remains viable as long as crucial support levels hold. However, if support crumbles, it triggers the initiation of a short trade, and this short position should be maintained until a resistance level is successfully reclaimed. This underscores the importance of adaptability. For those accustomed to habitually buying every dip, swift pivoting is essential when support levels start to erode. Failing to do so might result in surrendering hard-earned gains by persistently attempting to buy dips amidst a multi-day, multi-support downturn.

The 5179 fib extension is the important zone to watch for the upcoming week as it also happens to be the breakout origin on the move into 5260. Bulls are in control above 5179, bears take control if price starts to trade below 5179 (breakout failure). By take control - I mean the trend goes from buy the dips (bull) to short the rips (bear).

SPX Analysis:

Key Levels: 5179

Bullish Trajectory: 5179 is the breakout origin and the bull last stand. Above this level longs are still playable however there is heavy resistance now at 5230 that must be overcome for any upside continuation.

Bear Trajectory: A breakdown of 5179 turns this into a failed breakout which could lead to a sell towards 5110 and 5056. If 5056 falls, then we start a sell leg to fill the gap at 4983 and head into 4800’s.

Summary:
BTD continues to be in play as long as above 5179. A fail of 5179 is the first warning to bulls that we have shifted to a short the rips scenario and are headed to the gap fill at 4983

IWM 0.00%↑
As long as 200 keeps holding we are continuing to stage a move into 216 in this rising wedge. If 200 falls, then we could see a rising wedge breakdown that takes us back to 190

QQQ 0.00%↑
QQQ remains in active breakout with 408 continuing to be the pivot spot of control. Above 408 there is plenty of upside room into 472 (measured move).

Last week I mentioned that as long as we were trading above 427, we would likely retest 449. We hit exactly 449 last two weeks. 449 is the next spot bulls need to take out to target 456 and 472. If we are unable to take out 449 and start to head lower, 427 likely will be tested.

I have shifted the POC from 408 to 427. Bulls in control above 427. However if 427 is lost it will create a short opportunity for a move to 408-411.

TRADE ALERTS:

For those of you not in the Discord (www.jr28trading.com) I highly encourage it as we cover a lot of the setups given here but we also alert LIVE trade ENTRIES and EXITS.