How To Trade Bearish Flag Pattern: SPY π±
The central bank will commence its two-day policy meeting on Tuesday and is possibly staring at a dilemma as to whether continue on its rate hike path to tame in the sticky inflation or consider pausing for the time being until more clarity emerges on the extent of the ongoing banking crisis.
U.S. Presidential candidate Vivek Ramaswamy slammed the Federal Reserve ahead of its policy announcement on Wednesday, saying the central bank is the root cause of βthe disaster,β referring to the ongoing banking crisis, and yet βeveryone is hanging on to their words.β
"The fact that we are paying this much attention to the FOMC meeting, to the Federal Reserve at all, when in fact the Federal Reserve has actually been the source of this disaster for the last 25 years when they expanded their mandate to try to play this game of financial god β managing both inflation and unemployment, itβs like trying to hit two targets with one arrow. It has been a disastrous 25-year experiment," Ramaswamy said. He pointed out that market participants keenly watching out for every word spoken by Federal Reserve officials has nothing to do with their wisdom.
"What the Fed used to do in the 80s and in the early 90s was actually focussing on stabilizing the dollar. I think this is the under-discussed story in the whole thing. They are the root cause of this whole thing. Yet here we are hanging on to their words not because they have any special wisdom, remember that. Itβs just a question of market participants looking at how much more damage they possibly or are actually going to do," he said.
WHAT IS A BEAR FLAG?
A bear flag is a technical pattern that provides an extension/continuation to an existing downward trend. The bear flag formation is underlined from an initial strong directional move down, followed by a consolidation channel in an upwards direction (see image below). The strong move down is known as the βflagpoleβ whilst the consolidation is referred to as the βflagβ itself.
Bear Flag Formation Summary:
1. Preceding downtrend (flag pole)
2. Identify upward sloping consolidation (bear flag)
3. Ifβ―the retracement becomes higher than 50%, it may not be a flag pattern. Ideally, weβll see the retracement be less than 38%
4. Enter at top of flag or on breakout below the low of the lower channel
5. Look for prices to break lower with a length equal to the size of the flag pole
The bear flag is regarded as an extremely reliable price pattern when all its unique formation features are adhered to.
Some traders fall into the trap of mistaking a bearish flag pattern for a bullish breakout. Bearish flag patterns tend to be gradual rises in price in a downward trend whereas breakouts often exhibit sharper moves to the upside. There are indicators to assist traders in spotting potential breakouts with one of these being the Donchian channel.
As stated in the bear flag summary point 3, the Fibonacci retracement was rejected at 61.8% on 17 March, way above the 50% mark which invalidated the bear flag theory. There is a chance to trade within the channel before a final breakout after 2 days of inside bar candle pattern posted yesterday. This back-to-back inside bar occurrence last happened was in Sepat ember 2021!
The CME FedWatch Tool shows over 73% probability of a 25 bps rate hike during this policy compared to over 26% chance of status quo.
So what do you think? π€
π¨ If you find the information useful, I'd appreciate if you could click on Like π, Comment π¬ & Repost π this article found at the bottom of your screen. Follow me for the latest news, trading ideas & strategies to ride the market daily with profits! π€
@TigerStars @CaptainTiger @MillionaireTiger @Daily_Discussion @Tiger_SG @TigerPM
Disclaimer: Investing carries risk. This is not financial advice. The above content should not be regarded as an offer, recommendation, or solicitation on acquiring or disposing of any financial products, any associated discussions, comments, or posts by author or other users should not be considered as such either. It is solely for general information purpose only, which does not consider your own investment objectives, financial situations or needs. TTM assumes no responsibility or warranty for the accuracy and completeness of the information, investors should do their own research and may seek professional advice before investing.
- Juliaaa11Β·2023-03-21As long as it fails, there will be points to bash. They need to focus on learning from experience and preventing these types of problems from happening.1Report
- DaveLewisΒ·2023-03-21Chaos is the ladder, hopefully no one behind the scenes will try to climb that ladder...1Report
- JuliusGoldsmithΒ·2023-03-21Musk really has the courage to say anything1Report
- JessieTheresaΒ·2023-03-21This flag pattern looks beautiful to me1Report
- Gloria112Β·2023-03-21Will continue to raise interest rates!1Report
- wealth backΒ·2023-03-21thank you for sharing1Report
- Jerry OngΒ·2023-03-21Great sharing βπ»1Report
- KucingΒ·2023-03-21thanks for sharing1Report
- Hehehaha0088Β·2023-03-21Cool1Report
- pete13Β·2023-03-21Thanks1Report
- EuchingΒ·2023-03-21kLikeReport
- JunT89Β·2023-03-21π1Report
- JonnyboyΒ·2023-03-21Nice read1Report
- Keith YeowΒ·2023-03-21Great1Report
- JeromeAngΒ·2023-03-21π1Report
- DesmondLeeΒ·2023-03-21GLikeReport
- TxChrisΒ·2023-03-21[Smile]1Report
- PYXΒ·2023-03-21thanks1Report
- FoongkieΒ·2023-03-21great1Report
- ZeruelΒ·2023-03-21π€1Report