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There’s a moment in every sharp market move where the chart itself starts screaming at you. The angle gets steeper, the candles compress, and suddenly you’re looking at something that’s almost vertical.
That’s not sustainable. It never is.
I’ve been tracking this exact setup during the recent market decline, and what I saw was a textbook example of a parabolic move running out of steam. When you get a leg that’s already almost vertical, this time to the downside, it’s gotta stop.
The math doesn’t work any other way.
Here’s what that means for practical trading: The chances of us continuing lower and making another low by the end of the week is reasonably low.
Unless something catastrophic knocks us even further out of equilibrium — and I’m talking about events like somebody launching a nuclear missile or a dirty bomb going off somewhere.
Short of that kind of shock, this parabolic move isn’t sustainable because we’re almost vertical at this point.
What the Moving Averages Are Really Telling You
The vertical price action isn’t the only signal here. The behavior of the moving averages matters just as much because they’re some of the cleanest indicators of whether a market has found balance or is still searching for it.
When both the EMA8 (eight-day exponential moving average) and EMA20 start moving parabolically, that’s a tell. It means the move isn’t just fast — it’s dislocating.
A rising or falling market can be orderly, but parabolic EMAs tell you equilibrium hasn’t yet been found. They’re reacting violently because price itself has broken away from any stable center of gravity.
During the recent action, we crossed above and stayed above the EMA8 for most of the session. That was constructive, but it was just the first step. The real question now is whether the trend still wants to pull lower or whether we’ve finally stretched too far.
If equilibrium were still drifting down, price would snap right back toward it. But with the last leg already nearly vertical, the odds lean the other way. Moves like that burn themselves out.
How Markets Find Equilibrium After Vertical Moves
Once a move goes vertical, the path back to equilibrium almost never comes through another sharp surge. Markets don’t reset that way.
Instead, equilibrium typically re-emerges through sideways chop. A few sessions of back-and-forth action is how the market redistributes pressure. That pause is what pulls the EMA8 and EMA20 out of their parabolic curves and slows the MA50 from bending into one.
Right now, there’s no strong reason to expect equilibrium to settle any lower than current levels. In fact, there’s a reasonable chance the true balance point forms a bit higher, possibly near the MA200, which would represent a more stable center after such a rapid fall.
The key is recognizing what a vertical move really is. It’s not the continuation of a trend either up or down — it’s the exhaustion of one. And once you understand that, your positioning shifts from chasing to anticipating the return to balance.
The market can stay irrational longer than you can stay solvent, sure. But it can’t stay vertical.
Kane Shieh
Kane Shieh Trading
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*This is for informational and educational purposes only. There is inherent risk in trading, so trade at your own risk.
P.S. Did You Catch Roger Scott’s Most Important State of The Market Briefing Yet?
He revealed a game plan he’ll be doubling down on as the Iran war rages on…
One grounded in piggybacking on institutional and hedge-fund buying as it’s happening…
In fact, he’s eyeing one stock for this month.
