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03/04/2022 |

$IWM Monthly Chart Case Study: Trend Zones, Anchored VWAP, S/R Flips, and Seasonality

This is a monthly chart of $IWM showing a timeframe of over 20 years. This case study focuses on using trend zones, Anchored VWAP, S/R flips as well as seasonality. This analysis approach allows not only a technical perspective but also a view into how $IWM has performed on a month-to-month basis which creates the ability to see a full perspective rather than just a technical perspective.

$IWM Monthly Chart: Using Trend Zones, Anchored VWAP, S/R flips As Well As Seasonality

$IWM chart.

  1. This number shows a resistance trend zone starting from late 2020 to the current price action in 2022. As you can see, this is a “zone” rather than an exact trendline which was created using the “channel tool” on TrendSpider. To draw this zone, an original line is drawn connecting the top wicks of the higher highs on the chart and connecting the wicks and price action of the 2014 and 2015 highs.
  2. This number shows the anchor point of the VWAP from the Covid low. This is an important point to measure the volume weighted average price (VWAP) from since this is when the market “capitulated” before reversing to new all-time highs.
  3. This number shows the March 2020 VWAP with a percentage offset shown by the thick blue zone on the chart. This “offset” is a function of the previous low from January 2022 which did not touch the precise VWAP line. Notice how the price low of both January and February of 2022 respected this zone perfectly. At this point, the average participant from the Covid low was back to breakeven, drying up supply in the market, creating a price bounce as a function of the supply curve.
  4. This number shows the month-by-month seasonality since the financial crisis lows in 2009. Notice the strong move down in January of 2022 which correlates to weak seasonality for the month of January of 43%. This statistic translates to January closing higher than December’s monthly close only 43% of the time. However, notice going into the late winter and spring months, seasonality increases with high win rates for February, March, and April. This seasonality tool can help with combining technical analysis with traditionally non-technical tools to get a better edge in the markets.