Price at the start of the week didn’t get off to the best start as Monday opened up with a
gap-down candle. Not only did price gap down, but it also closed with a large bearish candle.
On a lower timeframe such as the 5-minute chart, the drop would have looked a lot more
frightening than it actually was. If you have been following our posts for a while, you will
know by now that we look at the bigger picture.
Because the S&P is in a long-term bull trend, we understand that the decline was likely to
be just a pullback. Of course, we were prepared in case it was the start of a bear trend,
but there were clear indications that this was just a pullback.
The first clue was that price came down and found support at a previous resistance turned
support level at $4257. Not only that, but the 50 simple moving average acted as support.
When you have two indicators around the same zone, it gives us a strong indication that
price may find difficulty breaking through. And this seems to be the case here.
The 20 simple moving average is also helping to keep price up, but price mainly finds support
at the 50 simple moving average.
The following day after hitting support, price made a complete reversal and is now heading
back to the upside. A break and close above $4393 will confirm a continuation of the bull trend.
We want to see price continue to trend strong and move towards the $5000 round number
which is the next level of resistance. Should the S&P accomplish this, then the rest of the
UK and US stock market will likely continue trending to the upside.
See below for more information on our trading techniques.
As always, keep it simple, keep it Sublime.
gap-down candle. Not only did price gap down, but it also closed with a large bearish candle.
On a lower timeframe such as the 5-minute chart, the drop would have looked a lot more
frightening than it actually was. If you have been following our posts for a while, you will
know by now that we look at the bigger picture.
Because the S&P is in a long-term bull trend, we understand that the decline was likely to
be just a pullback. Of course, we were prepared in case it was the start of a bear trend,
but there were clear indications that this was just a pullback.
The first clue was that price came down and found support at a previous resistance turned
support level at $4257. Not only that, but the 50 simple moving average acted as support.
When you have two indicators around the same zone, it gives us a strong indication that
price may find difficulty breaking through. And this seems to be the case here.
The 20 simple moving average is also helping to keep price up, but price mainly finds support
at the 50 simple moving average.
The following day after hitting support, price made a complete reversal and is now heading
back to the upside. A break and close above $4393 will confirm a continuation of the bull trend.
We want to see price continue to trend strong and move towards the $5000 round number
which is the next level of resistance. Should the S&P accomplish this, then the rest of the
UK and US stock market will likely continue trending to the upside.
See below for more information on our trading techniques.
As always, keep it simple, keep it Sublime.
