Do Markets ever Move in the Form of an Arc?

The ability of technical analysis to predict market action is the topic of endless debate. Technical analysis almost always employs straight trendlines to determine support and resistance. Occasionally however, market action appears to follow the path of an arc.

The chart below represents the S&P500 from the middle of April 2010 to 25 June 2010. As you can see there are 5 clear points that fit onto the arc of a circle. Is this just coincidental or is there something more to this pattern?


Answer by  andaman (240)

If the trend continues, the market will eventually start moving to the top part of the circle, and then we will start going back in time!


Answer by  philosophy (243)

I usually consider technical analysis to be hogwash, but there are 5 points where the S&P clearly hit the arc - that's a little hard to ignore.

Reply by Cubberley (69):
I believe in technical analysis and crop circles.  add a comment
Reply by Dobrinj (21):
technical analysis is baloney.  add a comment

Answer by  Centrifugal (69)

It is also pretty surprising how evenly spaced the touches are... If the trend continues we will be at 1130 in the middle of July.

Reply by snippets (16):
Thanks for the added insight... we have updated the image to reflect the regularity of the pattern.  add a comment

Answer by  Malinovsky (71)

Did you use software to find this, or did you just notice the pattern on your own?

Reply by snippets (16):
We just noticed it by eye, and then confirmed our suspicion by being able to draw a perfect circle through the five points in a vector-drawing program.  add a comment
Reply by onecrore (196):
I think if you used some pattern-seeking software, that you could find all sorts of curves, lines and other shapes in market action. Just because you found a pattern does not necessarily mean that there is something meaningful behind it.  add a comment

Answer by  toothpick (57)

If you throw a handful of toothpicks on the floor, you will undoubtedly find some patterns. "Look, three of the toothpicks were perfectly aligned" or "Those three toothpicks formed a perfect triangle." Patterns can form out of completely random events.


Answer by  DulceDeLeche (219)

The third "touch" didn't quite reach the line.

Reply by Sikkim (65):
For purposes of technical analysis, it is close enough... remember that the chart is smoothed out and doesn't reflect all the intraday action.  add a comment
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