SPY Analysis (July 1st)

1 juil. 2022

We are seeing a Heikin Ashi reversal candlestick forming on the weekly chart for SPY

Heikin Ashi candlesticks are used by chartists to identify trends more easily, as well as to identify potential trend reversals.

Reversal Heikin Ashi candlesticks have small bodies and long upper and lower shadows.

Interestingly, we are seeing a reversal Heikin Ashi candlestick occur at the Golden Ratio.

The Golden Ratio refers to the 0.618 Fibonacci retracement (though in the context of Fibonacci extensions, the Golden Ratio can also refer to the 1.618 extension). Those levels are often seen as the most reliable Fibonacci levels as they reflect a mathematically harmonic ebb and flow. The Golden Ratio forms order out of irrational numbers and is used to form order out of the randomness and chaos of the stock market.

The Fibonacci retracement levels on this chart are drawn from the November 2021 high down to the March 2020 low and are not logarithmically adjusted. In general, logarithmically adjusted Fibonacci levels are more reliable, but both formats are used by traders.

Of note, historically, the S&P 500 is stronger in July than in June. From 1980 to 2019, the average return for July was 0.79% while it was just 0.02% for June. (Source: stockanalysis.com/average-monthly-stock-returns)

Also credit to Breakout_Charts for this idea.