The red broadening top formation looks like the “Orthodox Broadening Top” described in Edwards and Magee’s book, “Technical Analysis of Stock Trends.”
Not to be outdone however, a final broadening formation (black line) presents itself.
The entire process has left in its wake a series of false signals and discouraged traders.
Volume, (that tends to diminish in a bearish wedge), is erratic in a broadening top.
There are multiple false directional signals in both directions.
This is likely one reason that a number of professional traders and money managers may be throwing in the towel. Many of their accounts have been chewed up by the whipsaw movements within the pattern.
The final point 5 has reversed into what may be best described as an impulsive wave. It has been followed by a corrective pattern that could not regain the prior highs. This may well be the last gasp of a very challenging trading pattern.
If the identification of this pattern is correct, the selling floodgates will be opened once the $SPX goes below 1085.
Dr. Janice Dorn is the only Ph.D. (Brain Anatomist) and M.D. (Board-Certified Psychiatrist and Addiction Psychiatrist) in the world who actively trades, writes commentary on the financial markets and manages a subscription-based website. Dr. Dorn has been trading the gold futures markets full time since 1993. She has written over 1000 articles on trader and investor psychology, and mentored over 600 traders and investors.She writes on all aspects of trading psychology and provides a real-time trading service on her website: TheTradingDoctor.com.