Trendlines are one of the strongest indicators in technical analysis. When we reach trendlines, it indicates something is about to happen, typically a consolidation and then either a breakout or a breakdown.
This is the weekly chart for the S&P 500, going back to 2018. The S&P is a strong gauge of the market’s health as it has a broad swath of companies and industries in comparison to smaller indices like the Nasdaq (tech) or the Dow Jones (a very small, select group of best performers). Additionally, the entire globe's indices tend to follow the S&P.
This chart shows 1-week candles dating back to 2018, where we saw the initial resistance trend we are bumping against now established. We are now testing it a third time after testing a bottom three different times, the last time exhaustively consolidating at the bottom before picking back up. The longer we consolidate at a trendline, the more chance there is for it to break down.
In our case now, if we continue up and break out of this 7-year trendline, it is a strong indicator that the stock market is about to break out even more, possibly establishing our old resistance as the new support line and reaching for unseasonably new highs.
Alternatively, if this resistance trendline holds as it has before, the S&P could easily lose 1,500 points while staying in range of its current trend.
If you are invested in equities and trying to decide whether to put more money in or move some of your investment dollars into something else in the near future, you should be paying attention to this chart!
Another thing to consider is the price of Gold, its up from $2400 to $4000 this year. Gold has definitely broke out and with no sign of weakness currently. Gold typicaly rises in price when the economic outlook is concerning to investors, as an attempt to safe haven some of their wealth. Usually when gold rises like this, the market has been dumping, not running. Mixed signals make it difficult read the coffee grounds, be vigilant and ready to react.
This is the weekly chart for the S&P 500, going back to 2018. The S&P is a strong gauge of the market’s health as it has a broad swath of companies and industries in comparison to smaller indices like the Nasdaq (tech) or the Dow Jones (a very small, select group of best performers). Additionally, the entire globe's indices tend to follow the S&P.
This chart shows 1-week candles dating back to 2018, where we saw the initial resistance trend we are bumping against now established. We are now testing it a third time after testing a bottom three different times, the last time exhaustively consolidating at the bottom before picking back up. The longer we consolidate at a trendline, the more chance there is for it to break down.
In our case now, if we continue up and break out of this 7-year trendline, it is a strong indicator that the stock market is about to break out even more, possibly establishing our old resistance as the new support line and reaching for unseasonably new highs.
Alternatively, if this resistance trendline holds as it has before, the S&P could easily lose 1,500 points while staying in range of its current trend.
If you are invested in equities and trying to decide whether to put more money in or move some of your investment dollars into something else in the near future, you should be paying attention to this chart!
Another thing to consider is the price of Gold, its up from $2400 to $4000 this year. Gold has definitely broke out and with no sign of weakness currently. Gold typicaly rises in price when the economic outlook is concerning to investors, as an attempt to safe haven some of their wealth. Usually when gold rises like this, the market has been dumping, not running. Mixed signals make it difficult read the coffee grounds, be vigilant and ready to react.
Disclaimer
The information and publications are not meant to be, and do not constitute, financial, investment, trading, or other types of advice or recommendations supplied or endorsed by TradingView. Read more in the Terms of Use.
Disclaimer
The information and publications are not meant to be, and do not constitute, financial, investment, trading, or other types of advice or recommendations supplied or endorsed by TradingView. Read more in the Terms of Use.