After a tremendous rise at the end of October, the S&P 500 returned to the top of a declining channel.
What pattern may indicate that the bears have held again? Or should the bulls break higher now?
Today, we're following the 4-hour chart as a guide:
The S&P 500 Index (US500 CFD) four-hour chart shows a pattern of lower "highs" and lower "lows," which together form a classic falling channel pattern. As the 100 and 200 simple moving averages are declining, there is a tendency in the price pattern.
Additionally, we can observe that the market is currently trading near the earlier October consolidation range, and the stochastic indicator is currently indicating that conditions may be overbought. Additionally, both are technical defences that can entice more buyers.
Technically speaking, there might be a chance for bears to short the market at a lower price than they saw last week. This could draw in a variety of bears, including those who have been waiting a while to sell and others who are holding longer-term shorts.
Furthermore, those taking profits on long positions may consider selling out in this region as well, given the previous week's extremely robust rally higher from the channel's bottom. In the event that the market becomes negative once more and has a daily average real range of about 60 points, a move to 4300 or possibly the pivot point at 4,285 could occur in a few trading sessions.
That is a compelling technical argument for sellers to regain control, but keep in mind that fundamentals are what mostly determine market direction and volatility.
We also need to take into account the other side of the market since fundamental catalysts have the ability to completely destroy chart setups.
An upward breach of the above technical confluence is a pattern that bulls should be aware of. The likelihood of luring buyers into a momentum move increases if this pattern materialises and, preferably, maintains firm above the 4400.00 significant psychological mark.
The daily true range indicates that a move to the R1 Pivot resistance at 4,447 and a retest of the 4,500 significant psychological mark before the end of the week are both plausible if that scenario comes to pass.
Once more, the fundies have the final say, so remember to complete your work there. Don't forget to put your excellent risk management abilities into practise once you've decided on a perspective and a plan!
