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I often look at other types of traditional charting techniques, such as chart patterns, trendlines and support & resistance levels as a natural complement to my more advanced Elliot Wave analysis. In fact my daily reports include Key Levels of support & resistance as part of my premium service. Using technical analysis can help traders hone and develop an appreciation of patience and discipline – two of the most difficult prerequisites for successful trading.
Short Term Forecast
My short term forecast this week for the S+P 500 was looking for a short entry in the range 1990-2019.5, Elliot Wave is wave (iii) down and sentiment has turned bearish so I was looking for a strong move lower to 1950.
Understanding Measured Moves
The psychological nature of the markets means that, like history, the future is just a repetition of the past. The people who produce patterns in the financial markets are unaware of their influences. It is these characteristic that can be observed and analysed in the chart actions. Measured moves are moves that repeat and correct in a similar price and time pattern. They can be used quite effectively in smaller time frames to calculate targets.
Acknowledging the 1950 Target
An analysis of the S&P 4-hour chart shows a rising support line which was broken today, the market has bounced off the lows of the day and the support line is holding. However, a measured move from the highs on 19th September of 2022 to the recent low of 1975 on 23rd September (total 47 points), when taken from the resistance of 2000 targets 1953 which is a mere 3 points from the Elliot Wave target of 1950.
When different types of technical analysis converge this way it can often be a strong indicator to trade and in this case that the shift to stronger selling pressure is gaining momentum.
Thierry Laduguie is Trading Strategist at www.bettertrader.co.uk
