The SP500 Index D1 – Bears might be getting ready for action
The SP500 Index, on the D1 time-frame, was in an upward move until the 1st of May when a higher top was recorded at 2958.2. Sellers found the price attractive at that level and supply overwhelmed demand.
A closer look revealed that the Momentum Oscillator displayed negative divergence between point a and b compared to the price at 2917.8 and 2958.2. This could have alerted technical traders to a possible reversal in the making.
After the top at 2958.2 the market broke through the 15 and 34 Simple Moving Average, the Momentum Oscillator pierced the zero baseline and a Strong Bearish Candle further strengthened the possibility of a trend reversal. A possible critical support level formed after the Strong Bearish Candle occurred with a lower bottom being recorded at 2798.2. Buyers then temporarily pushed the price higher with a lower top being recorded on the 16th of May at 2894.7. Supply however overcame demand again and the possible reversal was strengthened even further by the crossing of the 15 and 34 Simple Moving Averages, called a Death Cross.
If the SP500 Index breaks through the critical support level at 2798.2, three possible price targets may be projected from there. Attaching the Fibonacci tool on the support level at 2798.2 and dragging it to the top of the pullback at 2894.7, the following targets may be calculated. The first target can be anticipated at 2738.5 (161 %). The second price target can be predicted at 2642.0 (261.8%) and the third and final target may be expected at 2485.9 (423.6%).
If the lower top at 2894.7 is broken, the possible scenario is invalidated and will need to be re-evaluated.
As long as sellers maintain a negative sentiment and supply overcomes demand, the outlook for the SP500 Index on the D1 time-frame will remain bearish.
A closer look revealed that the Momentum Oscillator displayed negative divergence between point a and b compared to the price at 2917.8 and 2958.2. This could have alerted technical traders to a possible reversal in the making.
After the top at 2958.2 the market broke through the 15 and 34 Simple Moving Average, the Momentum Oscillator pierced the zero baseline and a Strong Bearish Candle further strengthened the possibility of a trend reversal. A possible critical support level formed after the Strong Bearish Candle occurred with a lower bottom being recorded at 2798.2. Buyers then temporarily pushed the price higher with a lower top being recorded on the 16th of May at 2894.7. Supply however overcame demand again and the possible reversal was strengthened even further by the crossing of the 15 and 34 Simple Moving Averages, called a Death Cross.
If the SP500 Index breaks through the critical support level at 2798.2, three possible price targets may be projected from there. Attaching the Fibonacci tool on the support level at 2798.2 and dragging it to the top of the pullback at 2894.7, the following targets may be calculated. The first target can be anticipated at 2738.5 (161 %). The second price target can be predicted at 2642.0 (261.8%) and the third and final target may be expected at 2485.9 (423.6%).
If the lower top at 2894.7 is broken, the possible scenario is invalidated and will need to be re-evaluated.
As long as sellers maintain a negative sentiment and supply overcomes demand, the outlook for the SP500 Index on the D1 time-frame will remain bearish.
Trade active:
First target reached.