On the S&P 500 index, a unique diamond pattern has just formed along with a number of other intriguing technical details.
The market is currently breaking through that level, but will it be sufficient to entice sellers and revive the downward trend?
Hello stock traders! As previously indicated, the S&P 500 Index's four-hour chart is displaying a rarely seen diamond pattern, which makes for an intriguing look on the charts today. When a consolidation pattern like this one breaks, traders look for opportunities to go long or short.
This formation took place precisely around the Fibonacci retracement area, the August swing bottom, and the falling moving averages at the minor psychological area of 435.00. Therefore, it should come as no surprise that bulls and bears were locked in a deadlock in early October as they tried to determine where to go from there.
As we can see a break out of the diamond to the downside, which may attract more selling and keep the downswing rolling, it appears that the bears are taking the initiative at the moment.
If this is the case, the recent selling pressure might be sufficient to push the market back to its last swing low, or roughly the significant psychological level of 4200.00, before buyers start to arrive to take profits or engage in contrarian trades.
It goes without saying that we must take into account the possibility that this is a fake out in the making, with buyers beginning to scoop up the dip and turning the October bounce into a real reversal move that might send the market back to the high resistance level around the 4500.00 big psychological area.
Before choosing a bias and developing your risk management strategy, it's probably a good idea to keep up with market flows by reading the Daily News and Watchlist posts, economic calendar, and Event Guides because, as always, the news headlines, economic data, and market narratives will decide who prevails between the bulls and the bears.
