Tuesday saw a downtrending bar on the cash S&P500 that ended at the short Gann moving average (red line). If the uptrend from March 6 is to continue this moving average should provide support as it did from March 30 to April 1.
Another methodology that takes advantage of the Level 1 Price Reaction Points (PRP) within the data is “Price Pulse (PP) Theory” as first espoused by Tony Plummer. A complete PP cycle consists of six segments: alpha, beta, delta, x, y and z. Delta is usually the strongest upward pulse and Z the weakest. On the current daily chart a PP cycle began not at the low but just previous on March 3. That low is labeled Z. A PP “buy” signal was generated when the Delta pulse moved above the previous Alpha pulse high and is marked by the solid line at 724.12 with the bull icon. Interesting is the fact that the short Gann moving average also bottomed at this point.
After the cycle completed at the March 20 swing low a new cycle began. In this current cycle we first note that the Delta pulse failed to move price much above the alpha pulse high of March 26. Since Delta should be the strongest pulse in the uptrend this failure to strongly move prices should be taken as a warning. As explained yesterday we then had a negative divergence in the RSI. However; although weakness appears to be setting in, the theory will not trigger an outright “sell” signal unless the current X pulse moves below the Beta pulse low of 779.81.
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