Declining into a Value Area – 8/22/22

On 08/22/22 US stocks had a sharp and deep decline, the low of the day was just above a Volume Profile – value area.  Its possible the decline ended on 08/22/22 or could  end on 08/23/22. 

The Volume Profile method illustrates volume on a vertical axis  that shows where the heaviest volume was related to price.  The method is a great way to discover support/resistance.  The widest area of volume is called “Point of Control” (POC) and is where the strongest support/resistance is  located. Sometimes price can  make a  bullseye turn at the POC, sometimes  turns can be made in the value area that surrounds POC.

The 60- minute SP – E- mini continuous chart (ES1!) courtesy of Trading View illustrates  the action.

The red- line shows the POC on 08/09/22, the blue surrounding the POC is  the value area.  The chart also illustrates  the value area as a green rectangle.

The hourly RSI reached  the oversold zone below 30% with a bullish divergence.  RSI also crossed above its moving average line.  The evidence from the hourly RSI implies a bottom could be in place on 08/22/22.

The one – minute S&P 500 (SPX) chart provides supplemental bullish evidence.

The one – minute RSI had a significant double bullish divergence.  The intraday A/D ratio also became  more bullish as  the final part of the decline was being made.

A multi- day rally may have begun or could begin on 08/23/22.  A move below SPX 4110 on 08/23/22 could trigger additional downside action. 

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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