S&P500 Time to reveal the real trend.

The S&P500 index has been trading within a short-term Channel Down pattern since the October 27 Low on the 4H time-frame. We presented this formation on our last week analysis:


The price rebounded at the bottom of the Channel Down and reached its top to form a Lower High. This happens to be also on the Lower Highs trend-line that started after the August 16 High. Since September 12 though, the RSI on the 1D time-frame has been trading on Higher Highs, i.e. showcasing a Bullish Divergence. On top of that, this is the first time since June, that the price didn't drop lower after an oversold 4H RSI but instead rose without any pull-back.

Those factors add weight on the bullish case. A candle close above the August 16 trend-line, immediately targets 3925 and then 4040 in extension. The medium-term targets are Resistance 1 (4175) and Resistance 2 (4328).

Failure to break the August Resistance though, maintains the Channel Down pattern, targeting first the 3643 Support (1) as a Lower Low.


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