Notice how prices ranged from the bottom to the top of the channel since November, including the middle of this month. But something changed this week because SPX didn’t return to the upper line. Instead, it formed a lower high after hitting a wall of sellers.
Next, consider that the all-time high occurred at 9:48 a.m. ET on Tuesday, February 16. That was beginning of the week because of President’s Day. Such early buying without follow-through can be a sign of exhaustion.
Third, has turned negative.
This creates the risk of bears getting more aggressive and attempting to drive prices down through the 50-day ( ) and the bottom of the channel.
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Agreed. In my opinion: trend lines are only good for assuming the psychology of the market. However, how much of the market is psychologically driven?