Uptrend

The speed and angle of the drop yesterday was impressive. WD Gann (1878-1955) was a trader that developed a series of geometric angle relationships of price with time. His nine angles were drawn from all significant high and low pivot points, and his theroy is in use today. There is some speculation that it doesn't work, but others swear by it. The bounce underway today may not last. The SP 500 chart below shows two breakdown lines in the past few days; one going all the way back to the October 2011 low. The 50 ema has also been breached. As a general rule, the longer the line, the more power it has for support or resistance. Since this lower line is an important line, I expect a backtest that would come in around SP 500 1387-1390. Once ths occurs, the day traders should step in and short the market, setting up a lower high for this downtrend. In fibonacci math from the last swing high to swing low: 1422-1358 =64 points. Further a 0.5 retracement yields a target of 1390 which is right at that uptrend line! Now if the market gets above it; well that would trigger a buy position and my trend cube would probably flip to a buy. However, I don't expect it as there is also channel resistance at 1383 in the hourly timeframe. Thanks for reading my posts.