The S&P 500 continued to decline last week. Past levels of support formed from previous lows, so we had to look at the next obvious level of support.
In this case, it was not a previous high or low but a psychological level in the form of the $4000 round number. The weekly timeframe clearly displays a reversal candle that did not close below $4000, which is a good indication of it being a strong level of support.
Price could still break this level, but for now, it is holding. What we want to see going forward is a bounce from support and a resumption of the bull trend. A pattern of higher highs and higher lows will indicate bullishness in the market.
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how high do you think it'll go before hitting a resistance? 4100?
Sublime_Trading
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@amogusamongus, that is the million dollar question. 4100 is definitely the first level of resistance and then the MAs. We need price to dictate that. A break back above the daily 200sma is crucial to resume the bull market.
amogusamongus
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So only a break above the 200ema on the daily could resart the bull movement? what about a break above the 200ema on the 1H chart? could it be a fakeout?
Sublime_Trading
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@amogusamongus, we are trend followers so we look at the higher timeframes. The 1 hour timeframe is day trading territory. It is not an approach we encourage. It is a lot of screen time for low reward. The higher timeframe means less work for more profit. It just requires some patience for the right set up, an important skill people often overlook hence why people day trade. I hope that helps.