The new trendlines we are now following on the S&P 500 Index (SPY) are illustrated on the chart below.
Friday’s breakout by SPY (magenta arrow) through the descending trendline has prompted us to update our technical view of the index. We are now operating from the framework of an ascending wedge on the daily chart (magenta lines). The blue oval is keeping us aware of the open gap beneath current price which reminds us of the weak structure below that should be repaired at some point in the future.
The dashed line represents all time highs which would naturally be regarded as the next upside target. However, the top of the wedge may prevent SPY from reaching this level for the next week.
Finally, ascending wedges are ultimately bearish patterns that result in breakdowns. We will also carry forward in our ongoing narative.
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