Diverging  Trendlines

The main characteristic of an Elliott wave – Ending Diagonal Triangle is  it’s  wedge shape between converging  trendlines.  The supposed S&P 500 (SPX) Ending Diagonal Triangle (EDT) from the 01/04/22 peak now has diverging  trendlines.

The daily SPX chart courtesy of Trading View illustrates the recent action.

Could an Expanding – EDT  be forming – which has diverging  trendlines?  Highly unlikely, this is a very rare formation.  I’ve never seen an Expanding – EDT on a daily chart, and only once on a  five – minute chart.

Short-term momentum is  bullish.  The daily RSI reading on 03/18/22 was 57.24, the reading at the higher SPX peak on 02/09/22 was 53.48.  This is  a bullish divergence and implies the SPX could soon reach at least the top made on 02/09/22.

The daily SPX – Bullish Percent Index ($BPSPX) courtesy of StockCharts.com updates the progress  of this  momentum indicator.

$BPSPX is  now also  above the level it recorded at  the SPX 02/09/22 top, confirming  bullish evidence from the daily SPX – RSI.

Seasonal patterns for US stocks are bullish until late April/early May.   Combined  with the bullish momentum signals,  there’s  a high probability the SPX could reach its  all-time high by late April 2022.  Possibly sooner. 

Published by Mark Rivest

Independent investment advisor, trader, and writer. Articles have appeared on Technical Analysis of Stocks and Commodities , Traders.com Advantage, Futuresmag.com, and Finance Magnates.

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