The SPY told a story weeks ago about the upcoming drop. I will quickly explain the signs and give a chart to show you exactly what I am talking about.

I have highlighted three points in the markets you should know about as a trader. This is the $SPY on a daily chart. The first bubble points to the 50 period SMA which is the orange line. Once the $SPY got below the orange line, it found immediate resistance. The second bubble was the pullback resistance range which was the 100 period SMA. The third bubble is the potential resistance range which is the 200 period SMA. IF we find rejection and the $SPY moves down from here on any rally, that is very bearish and we would be in for a much deeper fall. Even with rejection at that range, we may not have the fallout we previously had at these other levels. That being said, we have only seen steep drops from these levels, and a complete rejection at a very important technical level could cause an even worse panic than what we are currently seeing. I hope the markets rebound all the way back to highs. We have seen it before which makes the fall even more dangerous. People believe we should only go up. If the markets continue to fall, it won’t be just a little bit. It will be stronger than most will anticipate.

 

about the author:

Charles Moon

Charles Moon is a technical "whiz kid" whose experience lies in scalp/swing trading. A patient educator, Charles excels at coaching/mentoring and can make complex concepts simple. Prior to joining the ranks of Prosper Trading Academy, Charles was a proprietary equities trader with Great Point Capital LLC. Coming from a retail trading background, his experience can help those with no experience trading to seasoned veterans.

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