The SP500 Index H4 – Possible upward momentum building

OANDA:SPX500USD   S&P 500 Index
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The SP500 Index, on the H4 time-frame, was in a downtrend until the 13th of May when a lower bottom was recorded at 2797.8. Buyers found the price attractive and demand overcame supply.

A closer look revealed that the Momentum Oscillator displayed positive hidden divergence between point a and b compared to the price at 2890.4 and 2858.8. This could have alerted traders to a possible technical reversal in progress.

After the bottom at 2797.8, the market broke through the 15 Simple Moving Average and sellers temporarily pulled the price lower with a higher bottom being recorded on the 15th of May at 2812.3. Demand however overwhelmed supply and the 34 Simple Moving Average was then broken with the Momentum Oscillator also piercing the zero baseline. This further strengthened the possible technical reversal in progress.

On the same day a possible critical resistance level formed after a Strong Bullish Candle occurred and a higher top was recorded at 2858.8. The bears are currently trying to pull the market lower but if demand again overcomes supply and SP500 Index breaks through the critical resistance level at 2858.8, then three possible price targets may be projected from there.

Attaching the Fibonacci tool to the top of the possible reversal at 2858.8 and dragging it to the bottom of the previous pullback at 2812.3, the following targets may be calculated. The first target can be anticipated at 2887.5 (161 %). The second price target can be predicted at 2933.9 (261.8%) and the third and final target may be expected at 3009.1 (423.6%).

If the bottom at 2812.3 is broken, the possible scenario is invalidated and will need to be re-evaluated.

As long as buyers maintain a positive sentiment and demand overcomes supply, the outlook for the SP500 currency pair on the H4 time-frame will remain bullish .
Trade closed: stop reached: First target reached so there was little risk left in the trade. The trend then changed and the trade was closed at break even and a down trade engaged that is still open and in profit.
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