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- A Dark Cloud Cover pattern is a Japanese Candlestick Pattern that is typically associated with major top setups.
- Critical Support on the SPY highlighted by multiple technical analysis strategies suggests 335~335.25 is acting as a major support level.
- If price stays below the $339.95 level, then we interpret the trend as being Bearish. If price moves above the $343.55 level, it is Bullish.
Critical Support on the SPY (SPDR S&P500 ETF) highlighted by multiple technical analysis strategies suggests 335~335.25 is acting as a major support level. The rally in the markets that started late Sunday and carried forward into early trading on Monday, September 28, 2020, suggests the market is attempting to rally above this support level to establish a potential momentum base. My advanced price modeling systems and Fibonacci Price Amplitude Arcs (originating from the 2009 bottom) have clearly identified this area as a critical resistance/support zone.
MONTHLY DARK CLOUD PATTERN MAY BE CALLING THE TOP
The first chart below highlights the SPY Monthly chart data and shows the recent peak in price that broke through the major resistance level near 335, then collapsed back below that same level. Prior to this recent collapse, the COVID-19 peak in February also briefly touched this same resistance level – confirming it as valid. We believe the current price activity suggests the markets are attempting to form some sort of price base above this $335 level on the SPY.
As you can see from the recent highs on the chart above, there is a new Fibonacci Price Amplitude Arc range set up by the COVID-19 collapse that may interrupt this Base Setup process. Look for the smaller OBLIQUE on the chart near where the word “Support” is. This is a new Fibonacci Price Amplitude Arc that reflects the most recent price range activity into targeted Fibonacci based price zones.
If the SPY price falls below the $322 level of the current lower Arc, then the markets will appear to be attempting to break lower. If the SPY price rallies above the $357.50 level, then the markets will appear to be attempting to break higher. The current monthly price bar spans the total height of this new Fibonacci Price Amplitude Arc – thus it is suggesting a volatile type of topping pattern is setting up. If today was the last trading day of the month, this Monthly chart pattern would set up a very large Dark Cloud Cover pattern – a major topping pattern.