SPI MonthlyStart of the 2nd Quarter and expectation during this 3-month cycle is that the trend will continue towards 5170+
However, the SPI is still trading below the 3-year 50% level @ 4969 and in my opinion can continue to form a resistance zone until price retests the 3-month 50% levels.
In the first Quarter we have had a double monthly low pattern in February and a move towards the high in March:- resistance
The red channels are the single monthly range. We can see a breakout of the monthly highs @ 4767, which in theory should continue to push slightly higher in April but then rotate back down towards the monthly 50% levels.
There are two possible patterns during the 2nd Quarter...
A:- retests the 50% levels and continues towards the Quarterly highs @ 5170+
B:- finds support but continues to consolidate until MAY
Why?
The most robust UP trends often coincide with both the 3-month 50% levels and also the single monthly low (red), which is currently @ 4686.
That means that if April 50% level supports the market the monthly low will shift higher in MAY (B) and provide a better set-up to breakout of the 3-yearly 50% level and continue towards 5170+
These are a few of principles that I subscribe to...
1. all trends originate from 50% levels and push outward
2. breakout of the timeframe will continue until the next timeframe is reached:- break & extend
3. trends follow wave patterns of 2:- month & Quarter
In the above example we can see price trading above the March 3-month 50% level and heading into the March highs.
However the important pattern was not only the trend moving up from the March 50% level, but at the same time breaking out of a timeframe high:- single month
The breakout was the single month high of February:- RED.
That means there are two princples occuring at the same time....
1. Trend pushing outward from the 50% level.
2. break and extend pattern into April's highs.
The current resistance in March disappears and around April’s levels the risk increases, because the short term breakout pattern will complete, but it doesn’t mean the price will reverse down into a new 'bear-trend'
It’s simply a completion pattern:- break & extend pattern during a Quarterly cycle from one month into the next.
The 2nd Quarter Target remains @5170
Because we are treating each Quarter as its own cycle, for those wanting to Buy back into the market would need to be patient and use the 50% levels as support once again during the next cycle.
Because price is has tested the 3-Quarterly 50% level in February the expectation remains that the Trend is following a 2 Quarterly pattern towards the highs in the 2nd Quarter (5170)
