Upside Momentum Slowing
While it was another all-time high (ATH) for the S&P 500 last week, reaching 5,189, upside momentum is beginning to slow and concluded the week tentatively. The Dow Jones Industrial Average also ended a second week in negative territory and the Nasdaq 100 and Nasdaq Composite finished off ATHs in the shape of weekly bearish harami candlestick patterns.
Dip-Buyers Watching the S&P 500 This Week
Although buyers are still dominating the equity market, signs of weakness are beginning to emerge in the S&P 500.
From the weekly timeframe, buyers and sellers wrapped up last week even, consequently delivering an indecisive candlestick formation. Traders will be aware that following a meaningful uptrend, an indecision candle can signal a possible reversal to the downside (in this case, a downside move is strengthened by the possibility of negative divergence out of the Relative Strength Index on the monthly timeframe and an extreme overbought signal on the weekly timeframe). Should sellers make a show, the 5,000 level and channel resistance-turned-potential support (taken from the high of 4,607) could welcome price action this week.
In addition to the weekly timeframe’s indecision candle delivering a potentially bearish tone for the week, we can see that price action on the daily timeframe also finished Friday in the form of a bearish engulfing pattern. What’s interesting is that assuming sellers do make a show this week, the daily timeframe’s Fibonacci retracement ratios between 4,976 and 4.994 add additional support to the 5,000 level.
Therefore, if a correction unfolds and we test the 5,000 region this week, dip buyers seeking entry into the current uptrend will have a support zone to work with between 4,976 and 5,000, bolstered by potential weekly channel support.
While it was another all-time high (ATH) for the S&P 500 last week, reaching 5,189, upside momentum is beginning to slow and concluded the week tentatively. The Dow Jones Industrial Average also ended a second week in negative territory and the Nasdaq 100 and Nasdaq Composite finished off ATHs in the shape of weekly bearish harami candlestick patterns.
Dip-Buyers Watching the S&P 500 This Week
Although buyers are still dominating the equity market, signs of weakness are beginning to emerge in the S&P 500.
From the weekly timeframe, buyers and sellers wrapped up last week even, consequently delivering an indecisive candlestick formation. Traders will be aware that following a meaningful uptrend, an indecision candle can signal a possible reversal to the downside (in this case, a downside move is strengthened by the possibility of negative divergence out of the Relative Strength Index on the monthly timeframe and an extreme overbought signal on the weekly timeframe). Should sellers make a show, the 5,000 level and channel resistance-turned-potential support (taken from the high of 4,607) could welcome price action this week.
In addition to the weekly timeframe’s indecision candle delivering a potentially bearish tone for the week, we can see that price action on the daily timeframe also finished Friday in the form of a bearish engulfing pattern. What’s interesting is that assuming sellers do make a show this week, the daily timeframe’s Fibonacci retracement ratios between 4,976 and 4.994 add additional support to the 5,000 level.
Therefore, if a correction unfolds and we test the 5,000 region this week, dip buyers seeking entry into the current uptrend will have a support zone to work with between 4,976 and 5,000, bolstered by potential weekly channel support.