Chart of the Day - Thursday, September 14, 2023

bigger question is how this coiled spring resolves... pic.twitter.com/sJZkNPAPQU

— Callum Thomas (@Callum_Thomas) September 14, 2023

Today’s Chart of the Day was shared by Callum Thomas (@Callum_Thomas). The S&P 500 reclaimed its 50-day moving average today. However, Callum points out that price continues to coil into a tight triangle pattern or pennant, featuring rising support and falling resistance. Think of these patterns like the tightening of a spring. When a spring is tightened, potential energy gets built up until pressure is removed, and the energy is released. Similarly, as price tightens into a narrow range, potential energy gets built up for a strong resolution, higher or lower. These patterns typically resolve in the direction of the prevailing trend, which, in this case, is higher. Either way, the S&P 500 is nearing a decision point as we approach the apex.